- Pound (GBP) rises, adding to last week’s gains
- British people’s confidence in the UK economic outlook deteriorates
- Euro (EUR) falls on rising EBC rate cut bets
- Eurozone inflation & GDP data are due this week
The Pound-Euro (GBP/EUR) exchange rate is rising on Monday, adding to last week’s gains. The pair rose 0.39% in the previous week, settling on Friday at €1.1714. It traded between €1.1593 and €1.1753.
The euro is trading under pressure on Monday amid growing expectations that the European Central Bank will cut interest rates again in the June meeting.
This week is a busy week for eurozone data. The April inflation figures and Q1 GDP data are set to be published. Both inflation and economic growth figures significantly influence expectations for the ECB’s monetary policy outlook.
Expectations are for headline inflation to rise to 2%, marking the slowest growth in price pressures since October last year. Meanwhile, GDP is expected to confirm growth of 0.2% quarter on quarter. Slowing growth and cooling inflation would increase traders’ expectations that the central bank will cut rates again in the June meeting.
ECB policy maker Klass Knot said he sees the demand shocks and disinflation as a result of Trump’s tariffs in the near term, further fueling speculation of another rate reduction.
Meanwhile, a massive power outage in Spain, Portugal, and parts of France is causing havoc on the grounds but hasn’t yet impacted the common currency.
The pound is pushing higher, capitalising on a weaker euro despite signs that confidence in the UK around the UK economy has deteriorated sharply. According to the polling firm IPSOS MORI, confidence in the economy over the coming 12 months among people in Britain has fallen to its lowest level on record. Just 7% of British people see the UK economy improving over the next year, while 13% thought it would remain unchanged, and 68% see deterioration, representing the lowest degree of optimism since it began collecting data in 1978.
UK quantum E faces many challenges, including the global impact of Trump’s trade tariffs and concerns over the employment outlook after the Labour Budget impacted firms’ hiring plans.