- Pound (GBP) is inching higher after losses yesterday
- BoE policymaker Taylor signals further rate cuts
- Euro (EUR) is lower due to geopolitical concerns
- Danish & Greenland foreign ministers will meet JD Vance today
The Pound-Euro (GBP/EUR) exchange rate is rising, recouping yesterday’s losses. The pair fell 0.08% in the previous session, settling on Tuesday at €1.1529. It traded between €1.1526 and €1.1561. At 17:30 UTC on Wednesday, GBP/EUR trades 0.14% higher at €1.1545.
The pound is rising but trades in a narrow range despite dovish commentary from Bank of England policymaker Alan Taylor and ahead of UK GDP data tomorrow.
Taylor noted that inflation was expected to reach the target level by mid-2026, earlier than 2027 as previously thought, which could allow the Bank of England to cut rates more aggressively.
He sees sustainable cooling in inflation given that wage growth is easing and that he expects monetary policy to normalise sooner rather than later.
Taylor was one of the 5 policymakers who voted to cut interest rates from 4% to 3.75% in December. Other policy makers favoured no change to borrowing costs.
Attention will now turn to UK GDP data due tomorrow. The Office for National Statistics shows that the economy expanded 0.1% month on month in November, and manufacturing production is estimated to have grown at 0.5%.
The euro is edging lower even after French Prime Minister Lecornu’s government survived its first vote of no confidence in parliament, which had been called in protest against the sweeping trade deal between the EU and the South American Mercosur bloc.
Instead, signs of nerves continued to show through the European currency as President Trump doubled down on his plan to acquire Greenland.
The US president said that anything less than Greenland in US hands was unacceptable, as he reiterated his demand for control of the Danish territory ahead of a White House meeting on the issue today.
Trump IS insisting that the US needs Greenland for national security as it is vital for the golden Dome being built.
The Danish and Greenland foreign ministers will meet with US Vice President JD Vance and US Secretary of State Marco Rubio at the White House later today.
