EURGBP could see some action on Wednesday with UK inflation figures and German IFO business sentiment released.
EURGBP – Weekly Chart
The forex pair EURGBP targets uptrend support at the 0.86 level but will depend on economic data.
Economists polled by Reuters expect to see the annual inflation rate in the UK slowing to 8.2% in April from the current 10.1%. Electricity and natural gas prices jumped by 40.5% and 66.8%, respectively, a year ago, Pantheon Macroeconomics highlighted. However, they were flat last month, which should impact the ONS figure released on Wednesday.
However, a similar drop was expected last month, but prices remained at 10% annual growth. That makes the latest figures on Wednesday more critical.
Governments have been seeking to return inflation to the central bankers’ 2% target. UK Prime Minister Rishi Sunak wants to see the country close to 5% this year.
Meanwhile, the UK has seen its economy gaining a sharp upgrade from the International Monetary Fund (IMF).
The IMF said the UK chancellor, Jeremy Hunt, should maintain his planned squeeze on public spending. The group said tax policy should stay “aligned with monetary policy in the fight against inflation”.
Any financial surpluses should be used to reduce government debt and “rebuild fiscal buffers”, it said.
The UK economy is now expected to grow by 0.4% in the year ahead, after a previous expectation that it would shrink by 0.3%. The UK economy is now on course to outperform Germany.
“If we stick to the plan, the IMF confirms our long-term growth prospects are stronger than in Germany, France and Italy,” Chancellor Hunt said.
Tomorrow will also release data relating to the German economy with the IFO business climate. Thursday will also see consumer confidence data released for Europe’s largest economy.
However, economists expect the business sentiment indicator to be broadly flat.