- Pound (GBP) is falling after 8-days of gains
- UK grocery inflation eased to 3.3%
- Euro (EUR) rises as trade tariff saga continues
- The EU could be next in line
The Pound Euro (GBP/EUR) exchange rate is falling after 8 days of gains. The pair rose 0.68% in the previous session, settling on Monday at €1.2035. It traded in a range between €1.1957 and €1.2069 At 09:00 UTC GBP/EUR trades -0.15% higher at €1.2017.
The pound is falling after an eight-day winning run as buyers pause for breath. Today also reveals that grocery inflation edged lower in January after four straight months of increasing.
Market researcher Kantar said annual price inflation was 3.3% in the four weeks to January 26th, down from 3.7% in the previous month.
Cancel said that the decrease in inflation reflected a rise in January promotions from the supermarkets.
Despite the full January inflation, supermarkets have warned that the tax rises from the labour government’s budget in October, together with the rise in the national minimum wage, would be inflationary and could raise food inflation.
This information comes ahead of the Bank of England’s interest rate decision on Thursday where the central bank is widely expected to cut rates by 25 basis points to 4.5%
the euro is rising as investors continue to monitor trump trade tariff developments and worry that the European Union could be next in line.
While Trump has paused trade tariffs on Mexico and Canada, he has applied them to China.
Given that trade tariffs would be applied to Europe due to a trade imbalance rather than a border issue, this could take longer to negotiate, making a quick resolution like in the case of Canada and Mexico unlikely.
There is no eurozone economic data due to be released today. Yesterday, data showed that eurozone inflation rose for a fourth straight month. Meanwhile, core inflation held at 2.7%. Despite the hotter inflation, the EUR could struggle to book strong gains while trade tariff fears linger.
