Pound Sterling was largely on weak form yesterday, after the second estimate for 2017 fourth quarter UK GDP was unexpectedly revised lower by the Office for National Statistics (ONS). Quarter-on-quarter growth was revised down from 0.5% to 0.4%, while year-on-year growth was cut from 1.5% to 1.4%. This undermined hopes that the Bank of England (BoE) will vote to hike interest rates in May.
BoE Deputy Governor Sir David Ramsden will give a speech on productivity today; this has been a key issue for the UK economy so if he sounds optimistic on output growth the Pound could make gains.
GBP/EUR Exchange Rate Insipid despite Cautious ECB Meeting Minutes
The GBP/EUR exchange rate weakened yesterday, despite a disappointing set of meeting minutes from the European Central Bank (ECB) January policy meeting. It had been hoped that the Governing Council would soon begin to shift the tone of its monetary policy communications in an attempt to gradually prepare markets for the eventual end of QE and tightening of interest rates. However, the minutes show policymakers rejected the notion of making even the slightest of changes, revealing that they are still worried by the sluggish pace of inflation within the currency bloc.
There is a slew of finalised Eurozone data due for release today, as well as German consumption, government spending and capital investment data, which could boost the Euro if it shows that the currency bloc economy continues to see its private sector and government investing in the domestic economy.