The Pound Euro (GBP/EUR) exchange rate experienced some volatility last week as mixed UK data caused the Pound (GBP) to fluctuate.
What’s Been Happening: GBP/EUR Fluctuates on Mixed Data
The Euro (EUR) firmed against a weakening Pound at the start of the week, but lost its gains following some more dovish commentary from European Central Bank (ECB) officials.
A lack of market-moving EUR data left it without a clear direction through the middle of the week, while the ECB’s cautious approach continued to weigh on the single currency.
Finally, on Friday the Eurozone’s mixed PMIs gave the Euro enough of a boost to gain on a weakening Pound.
Meanwhile, Sterling initially slipped amid rising gas prices and renewed concerns around the UK’s energy crisis.
The Pound regained ground after the UK government announced £9.7bn of foreign investment into the country. Mixed economic data then kept GBP/EUR in a narrow range through the middle of the week.
However, Sterling slid on Friday. UK retail sales fell for a record-breaking fifth consecutive month, while the country’s PMIs gave a mixed picture. Both PMIs beat forecasts, but manufacturing output nearly stagnated due to ongoing supply chain and staffing issues.
Three Things to Watch Out for This Week
- UK Autumn Budget
The UK budget is to be announced on Wednesday. With the country’s economic recovery in a precarious position, GBP investors will be anxiously awaiting the government’s fiscal plans.
- ECB Interest Rate Decision
While the ECB is expected to leave policy unchanged, any hints from the bank’s forward guidance could cause movement in the Euro.
- EA Inflation Rate
The Eurozone’s flash inflation rate for October is expected to hit 3.7% – its highest level since September 2008. This could dent the Euro if the ECB strikes a dovish tone following its policy decision.
GBP/EUR Forecast
With three major events coming up, along with a number of smaller data releases, the GBP/EUR exchange rate could be in for another volatile week of trade.