GBP/EUR: Pound Heads Higher As EU To Mull Over Brexit Extension
  • Pound (GBP) is falling after yesterday’s gains
  • There are no fresh UK catalysts
  • Euro (EUR) falls despite improving German consumer confidence
  • German inflation is expected to rise to 2.4% YoY

The Pound Euro (GBP/EUR) exchange rate is rising after losses yesterday. The pair rose -0.06% in the previous session, settling on Tuesday at €1.1751 and trading in a range between €1.1737 and €1.1772. At 11:00 UTC, GBP/EUR trades +0.16% at €1.1770.

The euro is heading lower after regional German inflation data and ahead of the German inflation report for the whole country, which is due later today.

Economists expect inflation in the eurozone’s largest economy to rise modestly to 2.4%, up from 2.2% year over year in April.

The data comes ahead of eurozone inflation data later in the week and after an ECB survey showed that consumer inflation expectations are down to 2.9% over the coming 12 months from 3%.

Even a slight tick higher in German inflation is unlikely to knock the ECB off track for a rate cut in the June meeting. However, signs of persistently sticky inflation could prevent the ECB from steep rate cuts across the rest of the year after the joint meeting.

ECB policymakers have mixed opinions about whether the central bank should cut rates back-to-back or whether there should be pauses between rate cuts to assess the impact of cuts on the economy.

Meanwhile, German consumer confidence data shows a sharp increase in sentiment, rising to its highest level since April 2022. Consumer sentiment rose to -20.9, up from -24 amid cooling inflation and rising to wait great.

Meanwhile, the pound is drifting higher amid a lack of fresh fundamental catalysts. The UK economic calendar is quiet, with no high-impacting data or central bank speakers. Data yesterday showed that shop price inflation eased to its lowest level since 2021.

Attention will be on the UK elections on 4th July as both parties lay out their policies.