- Pound (GBP) rises after modest losses yesterday
- BCC report shows half of firms are still planning to raise prices
- Euro (EUR) falls ahead of ECB rate decision
- ECB is expected to leave rates on hold
The Pound Euro (GBP/EUR) exchange rate is rising after modest losses yesterday. The pair fell -0.03% in the previous session, settling on Wednesday at €1.1670 and trading in a range between €1.1657 and €1.1706. At 10:00 UTC, GBP/EUR trades +0.12% at €1.1683.
The euro is holding steady in quiet trade ahead of the European Central Bank interest rate decision later today.
The ECB is widely expected to leave its interest rate unchanged at the record 4% level but could signal to a June rate cut. The meeting comes as inflation in the eurozone area has cooled to within touching distance of the ECB’s 2% target.
Wage growth in the region has also shown signs of cooling. This is something an area that the ECB has been watching closely. Several policymakers have said that they want to see wage growth data in May in order to evaluate whether to start listening to monetary policy and for that reason, a June rate cut looks more likely than a move today.
The market is expecting the 1st is pricing in an 80% chance of the ECB cutting interest rates in June. This would make him one of the first major central banks to cut rates. The market is also pricing in 3 25 basis point rate cuts before the end of the year, which would take the rate at the end of the year to 3.25%.
The pound is inching higher after a report by the British Chambers of Commerce revealed that almost 50% of firms intend to raise their prices over the coming year as they continue to struggle with high wage bills.
The data revealed that 46% of companies are expecting to raise prices over the next 12 months, down only very slightly from 47% in the previous quarterly survey, which was published in January.
The findings of the report show that the Bank of England is cautious about cutting interest rates too soon.
While the recent increase in the national living wage is good news for employees, it adds pressure to businesses whose costs are already very high.
