- Pound (GBP) is edging lower in quiet trade
- BoE’s Bailey says the gilt market is still suffering
- Euro (EUR) looks to inflation data
- German and Spanish inflation cooled
The Pound Euro (GBP/EUR) exchange rate is edging lower after small gains in the previous session. The pair rose 0.09% yesterday, settling at €1.1573 after trading in a range between €1.1558 – €1.1619. At 06:25 UTC, GBP/EUR trades -0.1% at €1.1555.
The pound pushed higher in the previous session, helped by the improved market mood. The pound shrugged off mounting evidence that the UK housing market is coming under increasing strain and comments by the Bank of England Governor Andrew Bailey that the Gilt market is still suffering from the shocks over recent months and is not able to absorb a huge sale of assets. He was testifying before the Economic Affairs Committee in the House of Lords.
Today, UK economic data is in short supply, with just the Halifax house price data due to be released. This could leave the euro in the driving seat.
The euro is as investors look ahead to the release of eurozone inflation data. Inflation in the region is expected to cool slightly in November to 10.4% from the record 10.6% in October. The data comes after inflation data from Germany and Spain yesterday also showed that prices were cooling.
German inflation eased to 11.3%, down from the record high of 11.6% in October. Meanwhile, Spanish inflation saw an even more dramatic decline falling to 6.6%, down from 7.3%.
The data could provide ammunition to those policymakers who believe that that the ECB should start to slow down the pace of rate hikes in the December meeting.
However, the data is in contrast with ECB President Christine Lagarde’s comments on Monday that inflation in the eurozone may not have peaked yet.
In addition to inflation data, German unemployment which is expected to hold steady at 5.5% and French GDP data which is forecast to be 0.2% quarter on quarter in the July to September quarter. Upbeat data could help the euro pushed.
