EUR GBP Seeks Support from European Central Bank
The EUR GBP exchange rate was 0.40% higher on Friday as the pair seeks to create a base at the 0.8420 level. Germany will dominate economic data for the pair this week, while Wednesday will also see the UK chancellor Rishi Sunak announce the latest Autumn budget. Thursday will bring the latest ECB interest rate announcement and a chance for the hawks to catch up with the BoE.
The EUR to GBP is trading at 0.8458 at the start of the week’s trading.
Europe’s economy is a ‘deteriorating picture’ analyst says
Chris Williamson, chief business economist at IHS Markit, has said that economic data from the euro area is a deteriorating picture. He added that the manufacturing sector was ‘holding up’ but the output growth was one area that was part of a ‘dark picture’.
Output is said to “falling in France and near stalling in Germany” due to supply chain problems. HIS market is responsible for manufacturing and services sector data in the UK and Eurozone economies.
Asked if we had seen ‘peak bottleneck’ in supply chains, Williamson said that the outlook was likely to see a later peak and Asian data would help to clarify.
In the Euro area, GDP growth is expected to be 5 per cent this year and 4.3 per cent in 2022 despite a decline of 6.3 per cent last year.
However, growth is expected to be uneven, with the strongest growth estimated in Ireland with 13 per cent and the weakest in Finland and Germany at around 3 per cent in 2021, according to the IMF.
IMF European Department Director Alfred Kammer said of the inflation risks Europe is facing:
“We have a special issue worldwide, but particularly in Europe that natural gas prices have increased 5 times,” Kammer said.
“We actually had hot summers and cold winters, which reduced inventories. And we had some issues on the supply side. Again, we would actually expect that these issues and these constraints will be taken care of by the second quarter of next year,” he added.
Sunak to deliver budget but doesn’t see need for virus plan b
Chancellor Rishi Sunak will deliver his Autumn budget this Wednesday, but appearing on Sunday tv, he played down opposition calls for a return to restrictions under the so-called plan B.
“At the moment the data does not suggest that we should be immediately moving to Plan B,” Sunak said.
He added: “Well the prime minister actually just said that we’re looking at the data all the time, as you would expect us too. We’re monitoring everything, but at the moment the data does not suggest that we should be immediately moving to Plan B, but of course we will keep an eye on that, and the plans are ready.”
This week will see Germany dominate the economic data with IFO business numbers, consumer confidence leading the way. Thursday will be the big day with unemployment and inflation data coming on the same day as the latest ECB meeting.
The post EUR GBP Seeks Support from European Central Bank appeared first on Euro Rate Forecast.
Source: https://www.eurorateforecast.com/2021/10/eur-gbp-seeks-support-from-european-central-bank/
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