Yesterday the ECB raised their interest rate by a slightly unexpected 0.5% bringing the base rate to flat zero. This is their first rate hike in 11 years. The initial reaction was a strong bounce in the Euro against the Pound although the gains were quickly given back and the rate is back to mid range. The recovery for the Pound was probably led by the comments from the ECB President, Christine Lagarde, that economic activity in the Eurozone appears to be slowing down.
GBP/USD remains similar also with a sideways path being formed for the rate. However the rate is still relatively poor overall for the Pound, but the rout seems to have stopped for the moment.
UK retail sales came in as a mixed bag this morning. Month on month figures showed a contraction of 0.1% whereas analysts were expecting -0.3%. However year on year were worse than expected with a 5.8% contraction versus and expected -5.3%. These contractions are being assigned to the cost of living situation and consumers tightening their belts.
Today sees Eurozone and UK manufacturing and production numbers out which could affect GBP/EUR, but other than that it could be a quiet day short of a global news story.
Our Daily Economic Calendar is below.
Today’s Economic Calendar
EUR: 09:00 Manufacturing and Production Data
UK: 09:30 Manufacturing and Production Data
As ever we look forward to keeping you in the loop and look out for our next update.
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