- Pound (GBP) falls as Brexit tensions rise with the EU
- UK GDP to show growth, but outlook remains weak
- Euro (EUR) rises as German inflation hits 7.4%, ECB could hike in July
- There is no high impacting data due
The Pound Euro (GBP/EUR) exchange rate is falling on Thursday after losses in the previous session. The pair settled 0.44% lower yesterday, at €1.1650, after trading in a range between €1.1637 – €1.1732. At 05:45 UTC, GBP/EUR trades -0.35% at €1.1609.
The Pound closed towards the lower of the day yesterday and has continued falling today as Brexit concerns return to haunt the market. After months of discussion, the UK Government threatening to scrap the Northern Irish protocol has not gone down well with the EU and could spark a trade war with its closest neighbour. A trade war is the last thing the UK needs right now given that it would drive up inflation further, deepening the cost-of-living crisis
Foreign Secretary Liz Truss is due to speak with European Commission Vice President Maros Sefcovic today.
Today also sees the release of UK economic growth data, which is expected to show that the economy grew 1% quarter on quarter in the first three months of the year. The growth is principally owing to a strong start to the year, while growth is expected to have slowed in March to just 0.1% month on month.
The data comes after the BoE warned of inflation rising over 10% in the coming months and a recession.
The euro pushed higher yesterday after German inflation confirmed the preliminary reading of 7.4% year on year in April, up from 7.3% in March and a new record high.
Following the data, European Central Bank Governor Christine Lagarde hinted at a July interest rate hike. Momentum has been growing with the central bank for a sooner rate hike as inflation across the region surged, with some countries such as Greece already experiencing double-digit inflation.
There is no high impacting Eurozone data due to be released today. Instead, sentiment is likely to drive the index.