- Pound (GBP) fell on Friday but rose across the week
- Data supports BoE waiting to cut rates further
- Euro (EUR) fell across the week after soft data
- ECB President Lagarde will speak on Wednesday
The Pound-Euro (GBP/EUR) exchange rate fell on Friday, snapping a four-day winning streak. The pair rose 0.19% in the previous session, settling on Thursday at €1.1619. It traded between €1.1586 and €1.1642. At 21:00 on Friday, GBP/EUR settled -0.280.16% at €1.1586 but gained 0.2% across the week, marking the third straight week of gains.
The pound pushed higher last week after data showed that the UK jobs market remained resilient and UK growth was stronger than expected in Q2, raising questions over the Bank of England’s ability to cut rates aggressively.
The UK economy grew 0.3% quarter on quarter in the April to June period, while growth in June expanded at 0.,4% month on month. The data came as the Bank of England cut interest rates by 25 basis points earlier this month, but also raised inflation forecasts to 4%.
The market has reined in further BoE rate cut expectations, with another rate cut not expected until February next year.
The EUR rose on Friday but fell across the week after several mid-tier data releases across the week. German ZEW economic sentiment fell by more than expected in the month, and German inflation also came in below the ECB’s 2% target of 1.8% in July, in line with earlier estimates.
This week also saw the eurozone publish revisions of Q2 GDP data, which matched the previous estimate and showed the economy grew at 0.1% in the three months to June. However, industrial production contracted 1.3% on a monthly basis, worse than the 1.1% increase expected in May.
Looking ahead, the coming week is relatively quiet as far as economic data is concerned; attention will be on ECB president Christine Lagarde’s speech on Wednesday where she speaks at the Jackson Hole Symposium.