Euro to Pound Exchange Rate Update: ECB Hesitant on Rate Cuts, Germany’s PPI Falls, BoE Likely to Hold Rates
EUR/GBP retraces recent gains, trading around 0.8520 as ECB policymakers are cautious about reducing interest rates due to concerns about price pressures resurging. Germany’s Producer Price Index (PPI) dropped by 0.8% YoY in July, in line with expectations, while BoE is expected to maintain rates at 5.0% in September.
Last week’s UK economic reports suggest that the BoE will keep rates steady in September. Finance Minister Rachel Reeves emphasized the need for tough decisions to improve the country’s economic fundamentals. Chief Economist Rupert Thompson predicts that the next rate cut by the BoE could be delayed until November, potentially impacting the Pound Sterling.
Traders are focused on the upcoming Purchasing Managers Index (PMI) data release on Thursday, which could provide insights into the UK’s economic conditions and influence the BoE’s policy stance.
Economic Indicator: Harmonized Index of Consumer Prices (MoM)
The Harmonized Index of Consumer Prices (HICP) measures changes in prices of goods and services in the European Monetary Union. A high reading is bullish for the Euro (EUR), while a low reading is bearish. The next release is scheduled for Tue Aug 20, 2024, at 09:00.
In summary, the Euro to Pound exchange rate is influenced by ECB’s rate cut hesitation, Germany’s PPI decline, and BoE’s likely decision to hold rates. Traders should watch out for the PMI data release for further insights.