The EUR/GBP has rallied since March 2022. The pair surged 4.5% since March of this year but has reached a critical level. The price of the EUR/GBP over the past 24 hours has been mainly uncertain with very little volatility and volume. The price saw a very slight decline but has since slightly corrected upwards. The market is not confident in the GBP or the EUR as both regions have a high risk of a recession.
Yesterday the Eurozone released multiple economic statistics and was scheduled to release further economic releases over the coming days. The PPI for May reported a slightly lower growth rate but has not yet indicated contraction or close to it. The value fell to 0.7% for May from 37.2 to 36.3 points for the past 12 months.
Germany continues to disappoint in terms of economic statistics, with the foreign trade statistics for May disappointing investors with exports decreasing by 0.5% instead of the expected growth of 0.9%. In addition, imports rose by 2.7% instead of the forecasted 0.9%. As a result, the trade balance became a deficit, amounted to –1.0 Billion Euros, and can affect the country’s Gross Domestic Product. Germany also released one of its well-known and followed confidence indexes which indicated that confidence within the market is well below what was initially believed.
The picture for Europe may sound bleak other than the indications of rate hikes, but the picture in the UK is not looking all that different. The UK market is waiting for today’s release of the minutes of the last meeting of the Bank of England. Traders are eager to see if the report contains any indications of a further rate hike by the regulator or any other alterations to the monetary policy.
In addition to the above, the British Chamber of Commerce reported yesterday that national companies are becoming increasingly negative about the economic outlook for the coming months. This is mainly due to the rise in inflation and difficulty getting loans.
Over 5,700 companies took part in the survey between May and June, and only 54% expected better performance over the next year. Previously, 63% of companies counted on this. What is also worrying regulators is that over 65% of companies that took part in the survey advised they plan to raise prices for products and services in the next 2-4 months. This puts pressure on the Bank of England regarding whether to tackle inflation or the risk of a recession.
Regarding the price movement, it seems that traders are waiting for further drivers in the market. Today the market will be eager to see the many economic releases from the UK and EU, but mainly, investors will be closely following the speech of the Bank of England Governor.
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