Yesterday witnessed GBP poorest daily performance against the EUR since back in April. Recent earning reports across the globe, including UK entities – has shown a slow down in performance and markets are more prominent that Bank of England will be forced to lower their interest rates at their meeting next week. With a potential second 25 basis point cut in November. This change of movement, from its initial forward forecast of lower borrowing costs once in the year set for September – made GBP/EUR drop from 1.19 to 1.1848 throughout Thursday’s session, a decline of more than 0.4%.
What might have dampened the GBP/EUR decline, is that after ECB’s press conference yesterday, that was stale in terms of forward guidance. Germany’s Bundesbank President Joachim Nagel did not hold back as his peers and said that ECB is on course for additional rate cuts. He stated that they’re no longer concerned about inflation being ‘sticky’ and that as long there is no major negative surprises for Europe when it comes to economic data.
Main data release for today is core PCE and PCE (Personal Consumption Expenditure) price index. Seeing mixed signals yesterday between durable goods orders dropping off by -6.6% in June while GDP growth rate for Q2 indication a stronger than anticipated growth rate for the economy. Core PCE and PCE is seen as the preferred measuring tool for the Federal Reserve understanding inflation levels. It’s expected to fall off month-on-month from 2.6% back in may to 2.5% in June, moving closer to the Federal Reserve’s target rate around 2%.