The GBP EUR exchange rate was -0.11% lower as traders wait for Wednesday’s inflation reading from the UK before making any bets. The number will likely show a 0.1% gain to 9.1%. However, there is potential for further upside in the current climate. The UK saw its rail service crippled by the strikes over inflation and pay. In Europe, The Netherlands looks to join Germany in firing up coal plants to avoid a winter energy squeeze.
The GBP to EUR is still holding the support at 1.1650. The data will determine the next path.
Traders sit tight for inflation, rail strikes causing struggles
The pound sterling versus the euro awaits inflation figures for May before making any real trades.
A 0.1% rise in the yearly reading is expected after hotter price rises in recent months took the figure to 9%. Markets will watch the reading carefully after the BoE’s latest prediction was 11% in the autumn. Inflation’s effects on real wages influenced the current rail strikes.
The rail strikes began Tuesday. The country saw empty train stations. The Independent reported there were “more pigeons than people”, sharing photos of deserted platforms.
Union bosses dubbed it the ”biggest rail strike in modern history”. It will add further congestion to the country’s roads. Last gasp talks between the rail unions, Network Rail, and 13 operators fell short. They could not resolve pay, jobs, and conditions disputes. As many as 40,000 rail workers will take part in the walkout.
Motoring groups AA and RAC said that England, Scotland and Wales face big increases in traffic as a result of the action.
The Netherlands lifts restrictions on coal plants
The Netherlands joined Germany in pushing the pause button on the climate crisis with a return to coal-fired plants, according to Reuters. Russia’s reduction in fossil exports to the European Union led to an embarrassing U-turn for countries making efforts to pivot to greener energy.
“The cabinet has decided today to withdraw the production limitation for coal-fired power stations for 2022 to 2024 with immediate effect,” said the country’s climate and energy minister Rob Jetten. 00
“This means that the coal-fired power stations are allowed to produce at full capacity again so that less gas is needed for the production of electricity by gas-fired power stations. This reduces the risk of gas shortages and makes it easier to fill the gas storage facilities in the Netherlands and Europe.”
Russia reneged on supply numbers. This led to higher Dutch gas futures contracts. However, the worry is for the winter, with less supply and historically low storage levels.
The cap on coal-fired plants was set at 35% production but that will now be lifted into 2024 at the earliest. The Netherlands said that they would still meet their 2030 climate goals.
Energy will be a key issue for Europe in the winter. It will be the first real test since the beginning of the Ukraine invasion and the sanctions on Russia.
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