On Friday, the euro (EUR) remained relatively weak against the British pound (GBP), with the EUR/GBP pair hovering near its one-year low around 0.8515. Recent data from Germany and France indicated a decline in inflationary pressures for June, which added to the euro’s challenges.
In Germany, the final Harmonized Index of Consumer Prices (HICP) showed that inflation increased by 2.4% year-on-year in June, down from 2.7% in May, and a higher 2.9% in April. Monthly inflation was steady at 0.2%, consistent with earlier estimates, following a 0.1% drop in May.
Similarly, the French Consumer Price Index (CPI) revealed an annual inflation rate reduction to 2% in June, compared to 2.8% in May. The monthly decline was 0.3%, after a slight increase of 0.1% the month before.
Eurozone Data Indicates ECB May Pause Rate Hikes
These numbers have bolstered expectations that the European Central Bank will decide to pause interest rate hikes in July, allowing time to evaluate changes in energy markets and their effects on the eurozone economy.
Meanwhile, the British pound has gained some support from remarks made by Bank of England chief economist Hugh Pill, noted for his hawkish stance during the recent BoE monetary policy meeting, suggesting potential interest rate increases ahead.
During an appearance on the BBC’s Walescast this past Thursday, Pill emphasized the need to raise interest rates by year’s end, as he feels the central bank is “keeping the economy a bit too hot compared to the supply side.”
