Pound Euro (GBP/EUR) Exchange Rate Wavers as European Energy Crisis Continues

Pound Euro (GBP/EUR) Exchange Rate Continues to Trade in a Narrow Range

(Updated 15:45, 8/10/21) The Pound Euro (GBP/EUR) exchange rate has wavered in a narrow range today, moving between lows of €1.17686 to highs of €1.17927. At the time of writing, the Pound (GBP) seems to be edging up against the Euro (EUR) overall.

The volatility seems to have come as markets digested the latest US non-farm payrolls data, which caused movement in GBP/EUR due to its affect on global equity markets and the negative correlation between the Euro and the US Dollar (USD).

This may also be helping to keep the Pound Euro pair in a narrow range, as the payrolls data massively missed forecasts. A subsequently weaker US Dollar may be supporting the Euro. Meanwhile, speculation that the Federal Reserve may choose to delay tapering plans has increased risk appetite, thereby supporting the riskier Pound.

Original article continues below:

Pound Euro (GBP/EUR) Exchange Rate Flat amid Renewed Energy Concerns

The Pound Euro (GBP/EUR) exchange rate is trading sideways this morning, as renewed concerns over Europe’s energy crisis weigh on both currencies.

The pair is currently trading at around €1.177, virtually unchanged from this morning’s opening levels.

Pound (GBP) Dented by Domestic Energy Fears

The Pound (GBP) is rather muted today as a lack of UK data has left GBP investors without much impetus.

One factor that continues to weigh on the Pound is the ongoing European energy crisis, with anxiety rising again after fears eased yesterday.

Comments from Russian President Vladimir Putin cooled the chaotic gas market earlier this week, with Putin signalling that his country could increase gas exports to Europe.

However, some analysts are now questioning whether Russia actually has the stock or the inclination to fulfil that offer, suspecting that it may just be a tactic to fast-track approval of the controversial Nord Stream 2 pipeline.

Adeline Van Houtte, Europe Analyst at the Economist Intelligence Unit, explains:

‘Comments from Mr. Putin appear to have provided some comfort to the market. However, whether these additional gas supplies depend on a quick approval of Nord Stream 2 or not may not be the main issue.

‘Currently, the Russian domestic gas market remains tight, with its inventories running low, output already near its peak and winter looming in Russia as well, limiting gas export capacity…

‘European prices are unlikely to cool substantially in 2021.’

Meanwhile, the UK charity National Energy Action has warned that up to 1.5 million additional households will fall into fuel poverty in spring 2022, bringing the total up to 5.5 million, as energy prices are expected to rise again.

In addition, the National Grid has warned that the risk of power cuts this winter has increased.

Business secretary Kwasi Kwarteng is meeting with leaders from energy-intensive industries today to discuss concerns, as manufacturers worry about the profitability of production in the face of soaring energy prices.

With the UK’s energy crisis once again hitting the headlines, GBP appeal is muted.

Euro (EUR) Pressured by Poor German Data

Meanwhile, the Euro (EUR) is also subdued after Germany’s trade surplus narrowed by more than economists expected.

Germany’s balance of trade printed at €10.7bn, down from €17.9bn and below forecasts of €14.4bn. It was the country’s smallest trade surplus since May 2020, as imports expanded far more than exports.

The figures come following two days of poor German data, with factory orders slumping by 7.7% and industrial production falling by 4%. Supply chain issues and rising energy costs are hitting Germany hard, and as Germany is Europe’s largest economy this is having a significant impact on the Euro.

Meanwhile, the Euro is also affected by Europe’s ongoing energy crisis. With both currencies pressured by rising gas prices and fears of power shortages this winter, the Pound Euro exchange rate is trading in a narrow range.

Pound Euro Exchange Rate Forecast: US Data to Dent EUR?

As today’s session unfolds, any updates on the energy crisis or domestic headlines could influence the Pound Euro pair.

The US non-farm payrolls data this afternoon could also cause some movement in GBP/EUR. If it meets expectations, the report could boost the US Dollar (USD). This in turn may dent the Euro by way of the negative correlation between USD and EUR.


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