- Pound (GBP) is edging higher after a flat week last week
- UK inflation data & jobs data due this week
- Euro (EUR) is edging lower
- ECB is expected to cut rates this week
The Pound Euro (GBP/EUR) exchange rate is rising modestly after being unchanged last week. The pair fell -0.03% in the previous week, settling on Friday at €1.1944 and trading in a range between €1.1896 and €1.1979. At 11:00 UTC, GBP/EUR trades +0.06% at €1.1951.
The pound is inching higher against the euro but remains broadly unchanged as investors adopt a cautious approach ahead of a busy economic calendar this week. UK inflation data and unemployment figures are in focus and could provide further clues about the Bank of England’s next move and the next monetary policy review meeting in November.
Expectations that sticky inflation would keep the Bank of England on a gradual interest rate cut path have helped underpin the pound’s performance this year. However, comments by Bank of England governor Andrew Bailey at the start of this month warned that the central bank could cut interest rates faster if inflation allowed it.
The money markets are pricing in an 85% probability of a 25 basis point rate cut at the November meeting and consider the chances of another rate cut in December as a 5050 split.
Meanwhile, Prime Minister Keir Starmer will host some of the world’s largest businesses at a conference on Monday, where he is expected to discuss scrapping regulation that is holding back growth and investment. However, this is not expected to have a big impact on the pound.
Meanwhile, the euro is under pressure against the US dollar and just multilayer against the pound ahead of this week’s ECB interest rate decision. The market expects the European Central Bank to cut interest rates by 25 basis points, marking said reduction.
There is no eurozone economic data for investors to digest today. Instead, attention will turn to German wholesale prices, eurozone industrial production, and ZEW economic sentiment tomorrow ahead of Thursday’s rate decision.
