- Pound (GBP) is modestly lower
- UK grocery inflation eased to 5% but remains high
- Euro (EUR) is edging higher after small losses
- Ukraine-Russia peace hopes rise
The Pound-Euro (GBP/EUR) exchange rate is falling modestly, giving back yesterday’s gains. The pair fell 0.03% in the previous session, settling on Monday at €1.1577. It traded between €1.1564 and €1.1642. At 10:15 UTC GBP/EUR trades -0.03% at €1.1575.
The pound is edging lower on Tuesday after data showed that UK grocery inflation edged down over the four weeks to August 10. Data from the World Panel shows that UK grocery inflation came in at 5% down from 5.2% in the previous month’s report.
UK food retailers have said that increased employer taxes, as well as regulatory costs and higher staff wages, have all added inflationary pressure to groceries.
The data comes ahead of official UK inflation figures for July, which will be published tomorrow.
The data comes as the market has pushed back on Bank of England rate cut expectations, with the next 25% reduction not fully priced in until February next year, owing to slightly stronger than expected Q2 growth and signs of sticky inflation.
The euro is edging modestly higher following a successful meeting between U.S. President Trump and Ukrainian President Zelenskiy, which moves towards a peace deal between Russia and Ukraine.
The US and Europe are to work immediately on a Ukraine security plan and build Ukraine’s military as part of a package of security guarantees that could open the door to a landmark meeting between President Putin and Zelenskiy.
Attention will also be turning towards eurozone PMI figures, given the weak growth recorded in the second quarter of the year. Q2 GDP was just 0.1% quarter on quarter as momentum stalled.
ECB president Christine Lagarde is also due to speak tomorrow. The ECB left interest rates unchanged in the latest meeting, after eight consecutive cuts. The central bank is still expected to cut rates once more this year.