- Pound (GBP) is rising for a sixth straight day
- The UK economic calendar is quiet, with politics in focus
- Euro (EUR) falls after German inflation cooled
- German inflation eased to 1.9% YoY
The Pound Euro (GBP/EUR) exchange rate is rising for a seventh straight day. The pair rose +0.08% in the previous session, settling on Wednesday at €1.1860 and trading in a range between €1.1850 and €1.1893. At 113:00 UTC, GBP/EUR trades +0.18% at €1.1883.
The euro is falling against the pound and the dollar after German inflation cooled by more than expected in August.
German inflation, as measured by the Consumer Price Index (CPI), eased to 1.9% year over year in August, down from 2.3% in July. This was below the 2.1% level that economists forecast and is also below the European Central Bank’s 2% target level.
The data comes ahead of eurozone inflation figures, which are due on Friday and are expected to show that inflation is to 2.2% year on year, down from 2.6% annually in July.
Cooling inflation from Germany comes as data earlier in the week also showed a deteriorating economic outlook in the eurozone’s largest economy. German GDP for Q2 contracted by 0.1%. Consumer confidence is set to tumble in September amid rising concerns over the health of the jobs market.
These conditions could encourage the ECB to cut interest rates again when it meets next month after it cut them by 25 basis points in June.
The pound is pushing higher for a seventh straight day against the euro despite a lack of fresh fundamental data for investors to sink their teeth into.
The pound is being supported by expectations that the Bank of England will keep interest rates restrictive for now after cutting interest rates by 25 basis points in August. The next rate cut is not expected until November.
With little on the economic calendar, attention is more on politics after Prime Minister Sr Kier Starmer warned earlier in the week that the Autumn Budget will be painful and after he traveled to Germany in a bid to reset UK-EU relations, which will be a center to his growth strategy for the UK.