GBP/EUR: Will ECB Minutes Boost Euro vs. Pound?
  • Pound (GBP) rises ahead of lending data
  • BoE still expected to hike in September
  • Euro (EUR) rose yesterday despite falling German consumer confidence
  • German inflation data is due shortly

The Pound Euro (GBP/EUR) exchange rate is rising, paring losses from the previous session. The pair fell -0.26% yesterday, settling on Tuesday at €1.1617 and trading in a range between €1.1611 – €1.1676. At 07:35 UTC, GBP/EUR trades +0.18% at €1.1638.

The euro rose in the previous session despite German consumer confidence unexpectedly falling. Data showed that consumer morale dropped to -25.5, down from -24.6. Analysts had forecast a rise in morale to -24.3. The figure has been hovering around historically low territory for months as households remain squeezed by high inflation and rising interest rates.

Even as inflation has started to fall, consumer confidence remains weak. German inflation data is due to be released today and is expected to cool to 6% year on year in August, down from 6.2% in July. Cooler-than-expected inflation could take pressure off the European Central Bank to hike rates aggressively against a deteriorating macroeconomic backdrop.

Today, as well as German inflation data, eurozone consumer confidence data will also be released. Eurozone consumer confidence is expected to fall to -16 from -15.1. Weak consumer confidence could pull the euro lower.

The pound is rising despite a lack of fresh fundamental drivers. The UK economic calendar was quiet yesterday and sees only mid-tier data being released today.

Attention will be on UK mortgage applications and lending data. Mortgage applications are set to fall to 51,000 down from 54,660 and BoE consumer credit is set to fall to £1.3 billion, down from £1.66 billion.

Weaker housing and lending data could raise concerns over the health of the UK economy, adding to an already gloomy outlook.

The BoE is still expected to raise interest rates at the September meeting despite signs that the economy could be heading for a contraction in the current quarter.