The Pound Euro (GBP/EUR) exchange rate is making some headway today, although a lack of data on both sides might see the pair waver in a narrow range.
What’s Been Happening: GBP/EUR Slips on Mixed UK Data
The Euro (EUR) was subdued at the start of the week, as a number of lacklustre data releases left EUR investors without much impetus.
However, the Euro managed to pick up towards the end of the week, boosted by renewed EU optimism in the bloc’s Covid situation – particularly with the speed of its vaccination programme.
A slump in the US Dollar (USD) also benefitted the single currency, thanks to the pair’s negative correlation.
Meanwhile, the Pound wavered for much of the week as a lack of UK data left GBP without any clear directional bias.
Thursday brought a handful of UK reports, which presented a mixed picture. UK GDP grew by 4.8% in the second quarter of this year, showing a rapid pace of recovery. However, economists pointed out that this was less impressive when you accounted for the 1.6% slump in the first quarter.
In addition, some other data releases missed expectations, and this saw GBP/EUR hit an eight-day low as the week came to a close.
Three Things to Watch Out for This Week
- UK Employment Data
Tuesday’s data is expected to show a rise in earnings and a drop in unemployment claimants. If the figures meet forecasts, this could strengthen Sterling.
- Eurozone GDP
The second estimate for the Eurozone’s second-quarter GDP growth isn’t expected to be revised, but any surprises will likely drive movement in EUR.
- UK CPI
The UK’s CPI will be a key focus this week, especially after the Bank of England’s (BoE) comments earlier this month. Inflation is expected to ease from 2.5% to 2.3%, but if the figure overshoots then GBP could climb.
GBP/EUR Forecast
With UK data releases outnumbering those from the Eurozone, and most of them expected to be upbeat, GBP/EUR may be able to rally this week.