- Pound (GBP) falls after two days of gains
- BoE’s Ramsden warned over high wage growth
- Euro (EUR) rises after German inflation stays at 2.8%
- Eurozone inflation & ECB rate decision next week
The Pound Euro (GBP/EUR) exchange is falling after two days of gains. The pair rose 0.324% in the previous session, settling on Thursday at €1.2114. It traded in a range between €1.2083 and €1.2136. At 17:30 UTC, GBP/EUR is trading -0.12% at €1.21.
The euro is rising after German inflation remained unchanged in February for a second straight month 2.8% year on year. This was slightly stronger than the 0.7% that analysts forecast, based on the harmonised reading to compare with other European Union countries.
The data comes as the country braces itself for difficult coalition talks following last weekend’s snap election. This could mean weeks of uncertainty when the economy desperately needs a boost.
Rising competition high energy costs and still elevated interest rates amid an uncertain economic outlook have taken its toll on the German economy which contracted in 2024 for a second consecutive year.
Looking ahead, attention will now turn to eurozone inflation on Monday, followed by the ECB interest rate decision on Thursday. The ECB is expected to cut rates by a further 25 basis points.
The pound is heading lower on Friday as investors brush off Trump’s promise of a trade deal with the UK as soon as possible.
Meanwhile, Bank of England Deputy Governor Dave Ramsden warned on Friday that wage pressures in Britain have increased the risk of inflation remaining above the central bank’s target.
Data showed that private sector wage growth had risen to 6.2% in the final quarter of last year, a development that Ramsden highlighted as concerning. He added that he now sees the risks to inflation across the medium term as two-sided.
Ramsden voted to cut rates by 25 basis points in the meeting on February the 6th, and he still sees rates on a downward path as the core disinflationary process remains intact.
