- Pound (GBP) holds steady after losses yesterday
- UK grocery inflation cools to 2.1%
- Euro (EUR) unmoved by German ZEW economic sentiment data
- Eurozone inflation rises in May to 2.6% YoY
The Pound Euro (GBP/EUR) exchange rate is holding steady after losses in the previous session. The pair fell -0.13% in the previous session, settling on Monday at €1.1833 and trading in a range between €1.1856 and €1.1817. At 19:00 UTC, GBP/EUR trades -0.02% at €1.1835.
The pound was unchanged on Tuesday as investors looked cautiously ahead to tomorrow’s inflation data and Thursday’s Bank of England interest rate decision on Thursday.
Ahead of tomorrow’s consumer inflation index, market research firm Kantar released data showing that grocery inflation fell for the 16th month in June.
The data from Kantar showed that annual grocery inflation eased to 2.1% in the four weeks to June 9, down from 2.4% in the previous four weeks. The data also showed that take-home grocery sales rose by 1% in value terms, the slowest increase since June 2020, reflecting poor weather and falling inflation.
The data suggests that inflation is moving in the right direction. Consumer price inflation (CPI) tomorrow is expected to ease to 2% year over year in May, down from 2.3% in April.
The euro remained unchanged as German economic morale improved less than expected. The ZEW economic sentiment reading edged up to 47.5 in June, up from 47.1 in May but below the 50 level that was expected.
The weaker-than-expected data is likely to be the result of the increase in inflation in May.
Data today also showed that eurozone inflation ticked higher to 2.6% year on year in June up from 2.4% in April.
Stickier inflation comes after wage growth rose more than expected in the first quarter of the year. The data raises some questions about when the ECB might cut rates again after reducing them by 25 basis points at the start of this month.
