- Pound (GBP) rises after 2-days of losses
- UK GDP data in focus tomorrow
- Euro (EUR) slips after ECB economic bulletin
- The report supported the ECB’s hawkish stance
The Pound Euro (GBP/EUR) exchange rate is rising, snapping a two-day losing streak. The pair fell -0.14% in the previous session, settling on Wednesday at €1.1607 and trading in a range between €1.1598 – €1.1637. At 09:00 UTC, GBP/EUR trades +0.09% at €1.1621.
The pound is inching higher after falling in the previous session amid speculation that the BoE may cut interest rates earlier than initially expected as independent forecasters projected that inflation could fall faster than initially expected. New projections pointed to consumer prices falling to 2%, possibly as soon as April 2024.
With no fresh data to digest, investors are looking ahead to tomorrow’s data, which includes November GDP figures as well as industrial production.
Economists are expecting the UK economy to have contracted 0.1% month on month in November. This comes after a 0.1% contraction in the third quarter of last year and raises the chances of the UK economy tipping into recession.
Weaker-than-expected GDP growth could see investors bring forward rate-cut expectations, which could pull the pound lower. Meanwhile, stronger-than-forecast growth could see rare cut bets pushed back, lifting the pound.
The euro remains subdued, drifting lower following the ECB’s latest economic bulletin,
The bulletin reinforced the central bank’s stance on keeping interest rates higher for longer. The governing council is determined to return inflation to its two medium-term targets in a timely manner. The report failed to offer support to the single currency despite reinforcing the ECB’s efforts to push back against cutting interest rates. Early.
Looking ahead, there is no high-impacting eurozone economic data due to be released tomorrow. The focus will be on ECB chief economist Philip Lane, who is due to speak. Any comments regarding the inflation or economic outlook could influence the euro.