Pound Sterling Euro Exchange Rate News: GBP/EUR Buoyed by Weak Eurozone Inflation

GBP/EUR Exchange Rate Advances as Eurozone Inflation Plummets

The Pound Euro (GBP/EUR) exchange rate was met by volatility at the start of last week’s session amid a mix and thin trade over the New Year period as well as a couple of positive Brexit comments from UK officials.

While the GBP/EUR exchange rate was able to stabilise on Wednesday as markets digested the latest UK and Eurozone manufacturing PMIs, the volatility in the pairing returned in the latter half of the week as currency markets were rattled by a mini flash crash.

This saw Sterling lose out against the Euro as ongoing Brexit uncertainty caused the Pound to soften as investor risk appetite plummeted.

However the Euro was forced to relinquish many of its gains on Friday as the single currency was undermined by the publication of the Eurozone’s latest Services PMI and CPI figures.

The data showed that private sector activity in the Eurozone fell to a four-year low in December , while the CPI figures appeared to weaken the case for the European Central Bank (ECB) to target a rate hike in 2019 as inflation slumped from 1.9% to just 1.6% at the end of last year.

Pound Euro (GBP/EUR) Exchange Rate Subdued as Eurozone Retail Sales Impress

The Pound Euro (GBP/EUR) exchange rate is edging down at the start of this week’s session as markets welcome the release of the Eurozone’s latest retail sales figures.

According to data published by the European statistics agency retail sales in the bloc rose 0.6% in November, while October’s figures were also revised up from 0.3% to 0.6%.

This injects some much-needed positivity in the Eurozone’s recent run of economic data, the majority of which have painted a bleak picture of the bloc at the end of 2018 and may provide some hope the Eurozone may avoid a contraction in the fourth quarter.

GBP/EUR Exchange Rate Forecast: Brexit Uncertainty to Hang Over Sterling this Week?

Looking to the week ahead, the Pound Euro (GBP/EUR) exchange rate is likely to trade in a wide range this week as Brexit is put back in the spotlight.

Parliament returns from recess this week and is likely to be dominated by a debate on the EU withdrawal bill ahead of a key vote on Theresa May’s Brexit deal next week, something that could result in considerable volatility in Sterling, especially if it appears MPs are still likely to reject the deal.

Potentially offering some relief for the Pound at the very end of the week however will be the UK’s latest trade and GDP figures, with GBP exchange rates potentially strengthening if November’s data impresses.

Meanwhile EUR investors are likely to be focused on the Eurozone’s upcoming confidence figures, with the Euro likely to weaken if business confidence fell back in December as forecast.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail