The GBP EUR exchange rate opens the week at 1.1700 as the market absorbs the European Central Bank meeting. The market will see a three-month GDP update from the UK economy on Monday. The outlook for UK economic growth has been pretty grim in recent weeks.
The GBP to EUR has been trading in a range between the 1.1650-1.1850 levels since early May.
UK economy will give a stagflation update
Economic data released today will be a 3-month GDP update for the UK economy which is expected to show growth of 0.4%. A lower figure would increase the threat of stagflation to the British economy.
PMI figures for the British economy last week were revised higher and that performance from the services sector could provide a boost for the growth figures.
However, the British Chamber of Commerce said last week that growth was grinding to a halt as businesses rein in spending due to higher taxes and inflation.
“Our latest forecast indicates that the headwinds facing the UK economy show little sign of reducing, with continued inflationary pressures and sluggish growth,” said Alex Veitch.
The BCC was particularly concerned about a downgrade in corporate spending. The OECD also warned last week that the UK would be the worst-performing developed nation in 2023, apart from Russia.
The euro area economy is expected to grow by only 1.6% with the US growing by 1.2% while the UK lags behind them with no growth.
Boris Johnson suggested that the UK coming out of the pandemic first was why the UK lags behind. “Because we came out first, because of the steps that we took, we were slightly out of sync with much of the rest of the OECD,” Johnson said.
The UK economy has been volatile throughout the lockdowns because of its dominant services sector. That sector is now being hit by a multitude of new problems such as inflation and reduced consumer spending.
On the protocol issue, the Northern Ireland secretary has said that new legislation will not break internationally. Brandon Lewis stated that when people see the legislation, “they’ll see it’s focused on fixing the problems with the implementation of the protocol”.
“Doing so is not only within international law but works for people across the United Kingdom and respects the EU single market”.
Labour problems and staff shortages hit European travel
European travel is being affected by labour problems and staff shortages this summer.
Workers at France’s Charles De Gaulle airport walked off the job leading to a quarter of all flights being cancelled. Then last week, 1,000 pilots from Denmark, Norway and Sweden said they could on strike at the end of June. German carrier Lufthansa has also confirmed it will cancel around 1,000 flights in July.
The travel industry was hoping for better days after the pandemic but now faces rising wage inflation and higher fuel costs for airlines.
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