- Pound (GBP) rises after 2 days of losses
- BoE Swati Dhingra will speak again
- Euro (EUR) falls amid concerns over the German economy
- German GFK consumer confidence falls to -24.7
The Pound Euro (GBP/EUR) exchange is rising after two days of losses. The pair fell 0.11% in the previous session, settling on Tuesday at €1.2045. It traded in a range between €1.2043 and €1.2071. At 11:30 UTC, GBP/EUR is trading 0.15% at €1.2062.
The pound is rising against the EUR but falling against the USD after Prime Minister Kier Starmer pledged to increase military spending.
Starmer said he would increase defense spending to 2.5% of the UK’s GDP by 2027 and target a 3% level last seen immediately following the Cold War.
There is no high-impacting UK data due to be released today. Attention is focused on BoE speakers this week. Policymaker Swati Dhingra said that there is no consensus among policymakers over how quickly monetary policy should be eased.
Dhingra was one of two policymakers who voted to cut rates by 50 basis points in the February meeting,, while the majority voted to cut by 25 basis points to 4.5%.
The euro is under pressure after more disappointing data from Germany. The German GFK consumer confidence unexpectedly fell in March to -24.7 from -22.6, below the economists’ expectations of -21.
The expected decline in German consumer sentiment highlights the challenges facing Europe’s largest economy. Weak consumer confidence could point to lower consumption, a key driver of the economy.
The data comes after Q4 GDP showed a contraction of 0.2% quarter on quarter as the downturn continues. However, the election result may help things turn a corner. That said, while Friedrich Merz and his Conservative party won with a 29% majority the will need to form a coalition.
Still, the ECB is expected to continue cutting interest rates in the meeting next week to support the economy. The ECB cut rates by 25 basis points in January to 2.75%, amid concerns over the outlook for the economy and as inflation hovers near to the central bank’s 2% target.