- Pound (GBP) extends gains for a fourth day
- BoE’s Cunliffe considers the risk from, Russia to be relatively contained
- Euro (EUR) falls as Russia conflict continues
- No composite PMI, ECB meeting minutes
The Pound Euro (GBP/EUR) exchange rate is rising higher on Thursday for a fourth straight session. The pair rose +0.65% on Wednesday, settling at €1.2050, towards the high of the day. At 05:45 UTC, GBP/EUR trades +0.20% at €1.2079.
The Pound pushed higher in the previous session as the focus remained on the Russia, Ukraine war, sanctions on Russia and their impact. Bank of England policy maker Cunliffe said that the long-term financial impact of the war was unclear. However, comments that sanctions so far didn’t threaten the financial system even if they did severely hurt the Russian economy boosted the pound.
Today attention will be on the service sector PMI, which is expected to show that the UK’s dominant sector is recovering firmly.
The Euro struggled versus its major peers as the Russia Ukraine crisis continued. Although the common currency did pick up off session lows on hopes that there could still be a ceasefire as Russia said that it is prepared to speak with Ukraine.
Hot inflation data was also in focus. Eurozone inflation surged to 5.8% its highest level on record. This was well ahead of the 5.4% those analysts had penciled in and up from the 5.1% recorded in January.
The high inflation reading comes as oil prices continue to rise, suggesting that inflation is unlikely to slow any time soon. The data will add pressure to the ECB to hike interest rates. Up until now the ECB has been one of the most dovish central banks, this data could help policy makers change their mind.
Today sees the release of the minutes from the February monetary policy meeting. Yet with the meeting coming before the surge in inflation, they could be considered stale.
Eurozone business activity data will also be in focus. Expectations are for the composite PMI to rise to 55.8 up from 54.1 in January.
