The EUR continues to struggle against both GBP and USD. Yesterday saw GBPEUR sit closely to the 1.1800 mark, moving only 15 pips either side, EURUSD also moved within a 10-pip range. GBPUSD is currently at 1.3850 at the time of writing. GBP has also been pressured due to ongoing Brexit concerns and dollar strength.
Contrasting policies between the Bank of England and the ECB have been a driving factor in the GBPEUR rate. The BoE has acknowledged that life is returning to some sort of normality in the UK and held of cutting growth forecasts. However, the ECB could potentially loosen their policy further to lower inflation to the 2% target.
A risk for GBP at the moment comes in the form of ongoing Brexit concerns after the EU and UK extended the grace period for chilled meats into Northern Ireland until the 30th of September 2021. If negotiators fail to come to an agreement, we could see EU tariffs implemented on chilled meats out of the UK.
The EUR/USD rate is currently sitting at 4-month lows of 1.1740 after strong demand for the dollar. The Atlanta and Richmond Fed Presidents confirmed their position on rising inflation, which is currently pushing past one of the markers set to justify an interest rate increase. Today is fairly quiet on the data front, German ZEW data is due at 10:00am GMT and we will see CPI data released in the UK and EU throughout the course of the week.
Have a great day.
Thomas Read, Senior Relationship Manager.
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