- Pound (GBP) is flat after losses last week
- Unemployment and inflation data are in focus
- Euro (EUR) is flat despite weak factory production
- Eurozone industrial production fell 1.4% MoM
The Pound-Euro (GBP/EUR) exchange rate is unchanged on Monday after losses last week. The pair fell 0.16% in the previous week, settling on Friday at €1.1501. It traded between €1.1437 and €1.1536. At 10:30 UTC on Monday, GBP/EUR trades +0.00% higher at €1.1501.
The pound is unchanged at the start of a new week, which is expected to bring plenty of UK economic data.
The main focus will be tomorrow’s unemployment figures, Wednesday’s inflation data, Friday’s retail sales, and business activity data. Together, these data points will provide evidence on whether the BoE will cut interest rates again at the March meeting or wait until the April meeting, as the market expects.
Tomorrow’s unemployment data is expected to show that the UK labour market is weakening. Unemployment was at 5.1% in the three months to November, with the BoE expecting it to continue rising this year.
However, wage growth remains sticky at 4.7%, with public-sector pay keeping it elevated, almost double the level in the private sector. Strong wage growth is linked to sticky service sector inflation.
In the February BoE rate decision, the vote split was much tighter than expected, meaning that the bar for another rate cut is lower than previously thought. Wednesday’s CPI inflation data could be the deciding factor.
The EUR is unchanged on Monday despite weaker-than-expected eurozone factory output, which confirmed expectations of a considerable decline in December.
Industrial production fell by 1.4% month on month in the final month of last year. Expectations were for a 1.5% drop following a downwardly revised 0.3% growth in November, down from 0.7% initially reported. On an annual basis, industrial production slowed to 1.2% growth.
The data doesn’t impact ECB monetary policy outlook. The ECB is not expected to cut interest rates again this year. The central bank left the rate unchanged in the February meeting and said policy was in a good place.
