The Pound Euro (GBP/EUR) exchange rate has fluctuated this week, with a lack of UK data leaving Sterling open to losses.
GBP did manage to rebound against EUR on Friday, though, as the UK nears the 19 July date for removing most of the remaining lockdown restrictions.
What’s Been Happening: GBP/EUR Wavers amid Absence of UK Data
The Euro (EUR) was mostly muted for the first part of the week, as a number of data releases painted a mixed picture of the Eurozone’s economic recovery, with much of the downbeat data coming out of Germany.
Concerns over the spread of the Delta variant in many European countries also kept the single currency subdued.
The Euro then surged on Thursday, hitting a three-week high against the Pound, as the European Central Bank (ECB) altered its inflation target following an 18-month strategy review.
But a lack of data on Friday saw the Euro shed its gains against a strengthening Pound.
Meanwhile, the Pound also struggled to find a clear direction early last week amid mixed headlines, with reopening optimism offset by Brexit tensions and rising coronavirus cases.
With no data releases for support, Sterling weakened against the Euro following the ECB’s inflation target announcement.
However, the Pound Euro pair managed to rebound on Friday, despite the UK’s GDP figures printing below forecasts. GBP may have been buoyed by the UK’s reopening hopes and its balance of trade figures, which revealed a surprise trade surplus.
Three Things to Watch Out for This Week
- UK Inflation Rate
UK inflation is forecast to rise again from 2.1% to 2.2%, which would indicate increased economic growth. This could boost the Pound, especially if the figure beats expectations, as it did last month.
- UK Employment Data
Multiple employment releases on Thursday could also strengthen Sterling. The number of people claiming unemployment benefits is expected to have dropped again by 120,000 in June, while average earnings in May are expected to have surged by 7.1%.
- Eurozone Coronavirus News
With the Delta variant spreading through Europe, some countries are imposing new restrictions or travel bans in an attempt to curb rising cases. Any vaccine progress or negative headlines could drive movement in EUR.
GBP/EUR Forecast
With one week until the UK unlocks the rest of its economy, and some positive UK data due out, the Pound Euro exchange rate may climb as the week goes on.