The Pound Euro (GBP/EUR) exchange rate has weakened this morning as the dovish stance taken by the Bank of England (BoE) yesterday continues to limit Sterling’s appeal.
A better-than-expected consumer confidence reading from German has strengthened the Euro as the GBP/EUR pairing trend around the 1.1642 level.
Pound (GBP) Weakens on Dovish BoE Commentary
Yesterday afternoon the BoE’s interest rate decision and subsequent commentary regarding the UK’s economic recovery caused the Pound to stumble.
A lack of information regarding potential interest rate hikes and no softening around quantitative easing (QE) continues to be digested by markets this morning.
Last night’s announcement from the UK Government that Malta, Madeira and the Balearics were to be added to the UK’s travel green list, as well as hints that fully vaccinated UK residents returning home from amber list countries would not need to quarantine could not provide support to Sterling sentiment.
The Pound looks set to be open to further losses throughout the day as an absence of economic data limits GBP exchange rates.
Euro (EUR) Supported by German Consumer Confidence Index
The Euro has found itself steadily rising this morning against many of its major rivals following the release of the latest German Ifo consumer confidence index for July.
The GfK Consumer Climate Indicator in Germany rose to -0.3 heading into July 2021, the highest in almost a year and above market forecasts of -4.0, as consumers become more optimistic and willing to buy.
Rolf Bürkl, GfK consumer expert commented on the rise in consumer confidence saying:
‘We are leaving the lockdown behind us more and more. Sharply falling incidences as well as significant advances in vaccination allow ever more extensive loosening or opening. In addition, vacation is now possible again. This ensures increasing optimism, which is also expressed in better consumer sentiment.’
More so, a broad weakness in the US Dollar has this morning provided further support to the single currency.
Pound Euro Exchange Rate Outlook: German Inflation Figures in Focus
Heading into next week, Euro traders will be keeping an eye on a slew on economic data including Eurozone services sentiment and preliminary German inflation figures.
If economic data shows a positive outlook for the Eurozone’s current and future economic recovery then the Euro can expect to head higher for much of next week.
A quieter economic calendar for the UK will see pound investors keep an eye on any further coronavirus developments next week.