GBP EUR Higher for Fifth-Straight Day on German Data 

GBP EUR Advances Despite Better German Trade 

The GBP EUR exchange rate was higher for a fifth-consecutive day after German inflation data came in higher than expected. The latest number will pressure wages and add another headwind to the country. 

The GBP to EUR trades at 1.1950. It looks to the 1.2000 level, where stubborn resistance was found last year. 

German inflation unexpectedly higher in June numbers

German inflation was unexpectedly higher, putting pressure on the European Central Bank to raise interest rates further. 

Consumer prices in Europe’s largest economy jumped 8.5% from a year ago, dipping to 8.2% last month due to temporary government-relief measures. Analysts expected another deceleration to 8.1% for the German economy. 

Like the UK and other nations, food and energy costs drove the underlying data, offsetting fuel-tax rebates and the government’s subsidy for public transport. 

Inflation in the eurozone is running at 40-year highs. It saw the first ECB rate hike in eleven years. Some policymakers in the governing council pushed for more aggressive moves from the central bank. President Christine Lagarde said at the bank’s press conference that was signs of inflation becoming entrenched. 

There are further updates for inflation on Friday, with Italy and Spain positioned to see additional inflation records on Friday. 

ING analysts said of the data that a drop in headline inflation mostly resulted from the government’s energy relief package, which became effective at the beginning of June. This package will come to an end in August. Even if pricing power in both industries and services appears to peak, they still anticipate higher costs to remain over the summer months, if not for longer periods. They added that the risk of supply cuts to Russian gas impacted gas prices over the last weeks. This threat will likely maintain energy prices at significantly elevated levels into the winter. As a result, any meaningful retreat of headline inflation is not likely for the remainder of the year.  

The comments highlight that any short-term fluctuations will still see a higher trend in the months ahead, which will heap further pressure on the ECB. 

Unions warn of a general strike after Starmer moves

Unions warned that the UK could face a general strike this year after rail workers voted for new activities that will further slowdown the rail networks. 

The vote for additional strikes came after Labour’s Keir Starmer sacked his shadow transport minister Sam Tarry for joining the picket line with RMT workers at Euston station. It was a move far removed from old Labour parties. It will likely cause stress between the party and voters. 

Tarry was told that he breached his responsibility by making statements about pay and inflation that were not party policy. However, senior ministers expressed private concern about Starmer’s policy, which could increase the potential industrial action. 

The RMT Chief Mick Lynch was enraged by ministers’ threats to crack down on industrial action and warned of “the biggest resistance mounted by the entire trade union movement”. 

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