The Pound Euro (GBP/EUR) exchange rate fluctuated last week as the UK’s ongoing energy crisis and a hawkish Bank of England (BoE) announcement caused some volatility in the Pound (GBP).
What’s Been Happening: GBP/EUR Relinquishes BoE Gains amid UK Fuel Outages
The Euro (EUR) firmed against the Pound for the first half of last week, as the lifting of US travel restrictions on European visitors sent travel stocks higher.
Towards the end of the week, political jitters ahead of the looming German general election began to weigh on the single currency.
The Euro then tumbled on Thursday as the Eurozone’s PMIs missed forecasts, leaving EUR vulnerable to a strengthening Pound.
Sterling, meanwhile, was on the back foot last week, as the UK’s ongoing energy crisis dampened GBP appeal.
Some hawkish commentary from the BoE boosted the Pound on Thursday, as the bank’s forward guidance triggered talk of an earlier-than-expected rate hike.
Three Things to Watch Out for This Week
- German GfK Consumer Confidence
German consumer confidence for October is expected to drop for a third consecutive month to hit its worst level since June. This could dent the Euro.
- UK Energy Crisis
The UK’s ongoing energy crisis has had a big effect on GBP in recent days. If the negative headlines persist, Sterling may struggle this week.
- Eurozone Inflation Rate
The Eurozone’s flash inflation rate for September is expected to hit 3.3%. If so, the Euro may enjoy a bit of a boost.
With Eurozone data expected to be broadly positive this week, and with UK data thin on the ground, EUR may have the edge over GBP. However, the European energy crisis could undermine the Euro if it starts to have pronounced effects on European economies.