- Pound (GBP) is drifting lower in quiet trade
- BoE could cut rates as soon as August
- Euro (EUR) is rising despite weak data
- German IFO business climate weakens
The Pound Euro (GBP/EUR) exchange rate is falling on Monday, extending losses from last week. The pair fell 0.19% in the previous week, settling on Friday at €1.1825 and trading in a range between €1.1812 and €1.1862. At 12:00 UTC, GBP/EUR trades -0.18% at €1.1804.
The pound was drifting lower versus the euro at the start of the new week amid a quiet UK economic calendar.
The pound has continued to move away from the 22-month high reached earlier in June after the Bank of England’s interest rate decision last week. The central bank left rates on hold as expected, and Andrew Bailey pointed to a possible August rate cut, pulling the pound lower.
Meanwhile, data on Friday also showed that UK service sector activity grew at a slower pace as high interest rates put brakes on the economy.
This week, the UK economic calendar is quiet. The focus is on GDP data on Friday.
Politics will also be in focus as the UK election on July 4th approaches. Analysts broadly believe that a labor win could be pound-positive. However, the Bank of England’s interest rate decisions and rate cut outlook will likely have a bigger impact.
The euro is heading higher despite the leaked German economic sentiment data showing that business sentiment deteriorated.
The IFO business climate index unexpectedly fell to 86.7, down from 89.3, and defied expectations of a rise to 89.7.
The data comes after the German business activity data on Friday showed that business activity weekend in June, after two months of growth, suggesting that momentum in the economy has slowed again.
Looking ahead, several ECB policymakers are due to speak today. Investors will watch their comments closely for clues about when the ECB could cut rates again after reducing them by 25 basis points at the start of June.
