GBP/EUR Exchange Rate Sinks Despite Upbeat Expectations for BoE Monetary Policy
The Pound Euro exchange rate fell this morning ahead of the Bank of England’s (BoE) interest rate decision. The bank is expected to hold the rate at 0.1% and raise its growth forecasts in its latest Monetary Policy report.
The pairing is currently fluctuating around €1.15.
Sterling struggled against the single currency today as investors await the BoE’s assessment of the British economy. Private sector growth, mortgage lending, and expectations for GDP are all at record highs
Elsa Lignos, an analyst at RBC, also predicted a smaller spike in UK joblessness this year:
‘Significantly, the extension of the government’s furlough scheme, which was announced at the budget, is likely to see the MPC lower its estimate of where it expects unemployment to peak once support is withdraw.’
However, growing tensions between France and England over post-Brexit fishing rights have dampened demand for the Pound today.
If relations between the UK and the EU continue to sour, then we could see the Pound Euro exchange rate continue to fall throughout today’s session.
Sterling could however claw back some of its losses if the BoE is more bullish in its monetary policy meeting following the interest rate decision later this afternoon.
Euro (EUR) Edges Higher as German Factory Orders Beat Forecasts in March
The Euro (EUR) rose against Sterling today following the publication of the latest German factory orders figures for March. The figure beat forecasts and rose by 3%, buoying confidence in the Eurozone’s powerhouse economy.
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, commented on the data:
‘Demand in German manufacturing was still rising briskly at the end of Q1, though on this occasion, major orders—mainly in transport equipment—flattered the headline.’
Today also saw the latest Eurozone retail sales report for March beat forecasts and rise by 12%, despite a consensus of a 9.6% increase.
As a result, EUR investors have become more optimistic about the outlook for the Eurozone’s retail sector.
Analysts at Reuters said:
‘Eurozone retail sales rose by more than expected in March… pointing to pent-up consumer demand as pandemic lockdowns ease.’
EUR rose against Sterling today as confidence continues to grow in the Eurozone’s economy despite the EU’s delay in its Covid-19 vaccination rollout at the beginning of this year.
Pound Euro Exchange Rate Forecast: Could Positive German Trade and Factory Data Boost the Single Currency?
Euro (EUR) investors will be awaiting tomorrow’s release of Germany’s industrial production figure for March.
Any further signs that the Eurozone’s largest economy is on the road to recovery would be EUR-positive.
Tomorrow will also see the publication of Germany’s trade balance report for March. If exports continue to rise, then the EUR/GBP exchange rate will continue to rise.
Pound (GBP) traders will be eyeing tomorrow’s release of the final UK construction PMI for April.
The Pound Euro (GBP/EUR) exchange rate could begin to claw back some of its losses if confidence in the UK economy continues to improve.