- Pound (GBP) rises after gains last week
- BoE rate decision is on Thursday
- Euro (EUR) falls after ECB cut rates last week
- Eurozone trade surplus is €21.9bn
The Pound Euro (GBP/EUR) exchange rate is rising after modest gains last week. The pair rose 0.08% in the previous week, settling on Friday at €1.1846 and trading in a range between €1.1814 and €1.1884. At 11:00 UTC, GBP/EUR trades 0.17% at €1.1866.
The pound is rising at the start of the week with the Bank of England interest rate decision in focus. Offering support to the UK currency’s current expectations that the central bank will leave interest rates unchanged on Thursday’s meeting.
The latest Reuters poll, published at the end of last week, revealed that all 65 economists who took part in the survey on Friday expect the BoE to leave interest rates at 5% this week.
Ahead of Thursday’s rate decision will be UK inflation data on Wednesday which could inject some volatility into the pound ahead of the Thursday rate decision. Economists expect you can inflation to remain unchanged at 2.2%. However, service sector inflation, which the central bank is closely watching, is expected to tick higher to 5.5%, up from 5.2%.
The euro is trading lower, extending losses from last week when the ECB cut interest rates by 25 basis points as expected. The central bank also lowered growth forecasts while warning that risks to inflation remain. The ECB reiterated that it will remain data-dependent, and decisions will be made on a meeting-by-meeting basis.
Today, the economic calendar is relatively quiet, with just eurozone trade balance figures in focus. The trade balance for July came in at €21.2 billion, down from € 22.3 billion but ahead of forecasts of € 14.9 billion.
Exports of goods to the rest of the world will rise by 10.2% after falling 6.3%. This marked the first increase in three months. Imports also increased rising 4% after an 8.4% decrease.
Looking ahead, attention will turn towards tomorrow’s ZEW economic survey data and eurozone inflation figures later in the week. However, these will be the second reading for inflation figures, which tend to be less market-moving.
