- The British Pound (GBP) rises after encouraging data on the construction sector
- Today UK housing data will be released on a calm day
- Euro (EUR) fell after disappointing German factory orders, but PPI jumped
- March ECB meeting minutes expected
The Pound Euro (GBP/EUR) exchange rate is holding steady after slight gains in the previous session. The pair settled up +0.1% on Wednesday to €1.1992, after trading in a range between €1.1971 and €1.2011. As of 05:45 UTC, GBP/EUR is trading -0.03% at €1.1988.
The euro slipped lower in the previous session, weighed on risk aversion as more sanctions were imposed on Russia and hit by disappointing data.
German factory orders fell -2.2% month-on-month in February, well below the expected decline of -0.2% while marketing the first drop in factory orders in four months. A drop in foreign orders led to the fall, even before the Russian invasion took hold.
Expectations for Germany’s economic recovery have been dashed since the war drove up energy prices and caused further disruptions to supply chains.
The data comes as advisers to German Chancellor Olaf Scholz cut the growth outlook for Europe’s biggest economy to 1.8% from 4.6%.
Meanwhile, eurozone headline inflation jumped to 31.4% year-on-year in February from 30.6% in January. With the ongoing conflict in Ukraine, headline inflation is expected to rise in the coming months. This will often result in higher consumer price inflation.
Looking ahead, the minutes of the March meeting of the European Central Bank should be published. The minutes could shed more light on how concerned policymakers are about jumping inflation.
The pound edged higher yesterday, helped by data showing the resilience of the UK construction sector even as prices continued to rise. The construction PMI posted was 59.1 in March, in line with the February reading and above the 50 levels, separating expansion from contraction. It was also the fastest pace of production growth since June last year.
Today there is no high impact UK economic data. Instead, UK house price data could offer clues as to how the sector is holding up after three BoE interest rate hikes.