- Pound (GBP) rises for a second straight day
- BoE’s Haskel says rates should remain here for as long time
- Euro (EUR) falls as German retail sales drop
- German unemployment holds at 5.9%
The Pound Euro (GBP/EUR) exchange rate is rising for a second straight day. The pair rose +0.15% yesterday settling on Wednesday at €1.1671 and trading in a range between €1.1645 to €1.1678. At 10:00 UTC, GBP/EUR trades +0.21% at €1.1695.
The pound is pushing higher on Thursday after hawkish comments from Bank of England policy maker Jonathan Haskell and despite data confirming that the UK economy fell into a recession at the end of 2023.
Jonathan Haskell, the Bank of England interest rate setter, said that rate cuts should be a long way off. His comments come a week after he voted to leave rates on hold in the latest Bank of England interest rate decision after calling for higher rates in previous meetings.
Haskel pointed to persistent underlying inflation as a reason to keep interest rates at the highest level since 2008. His comments diverge from Andrew Bailey’s, who had said that there are encouraging signs that inflation is coming down, although he did note that the central bank wanted to see more evidence that price pressures were under control.
Meanwhile on the data front UK GDP confirmed that the UK economy tips into recession contracting 0.3% in the final quarter of 2023. Still more recent data has suggested that’s the recession in the UK economy was short lived as January’s GDP rose 0.1% MoM.
The euro is under pressure after German retail sales plunged in February. Retail sales slumped 1.9% month on month, and they lost in defying expectations of a rise of 0.3%. This marked the fourth straight month of falling sales, and paste painted a grim picture of consumer spending. The data showed that consumers in the eurozone’s largest economy remained cautious, and a rebound in the economy in the first quarter is looking increasingly unlikely.
The data comes after German consumer confidence ticked slightly higher late earlier in the week. However, the willingness to spend sub-index was lower.
Meanwhile, German unemployment was slightly more encouraging, with a 4000 increase in unemployment better than the 10k forecasts, and the unemployment rate remained at 5.9%.
