Pound Euro (GBP/EUR) Exchange Rate Remains Subdued on Dovish BoE Comments
(Updated 17:00, 30/11/21) The Pound Euro (GBP/EUR) exchange rate has continued its downward trajectory today, despite a rally in the US Dollar (USD) weighing on the Euro (EUR) by way of the negative correlation between USD and EUR.
Some comments from Bank of England (BoE) policymaker Catherine Mann may have put further pressure on the Pound (GBP). Mann warned that the Omicron Covid variant could hit consumer spending, thereby further slowing the UK’s economic recovery.
Mann also said that it was ‘premature’ to be discussing when a BoE rate hike will take place, let alone by how much the rate will rise.
These remarks may have added to the many headwinds facing Sterling, while a lack of UK data left GBP vulnerable to losses.
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Pound Euro (GBP/EUR) Exchange Rate Down amid Brexit Concerns and Positive EA Data
The Pound Euro (GBP/EUR) exchange rate is subdued today, trading at a two-week low, amid Brexit worries and a risk-off mood.
The Euro (EUR), on the other hand, is enjoying some strong data releases from Germany and the Euro area.
Pound (GBP) Slips amid Brexit and Covid Concerns
The Pound (GBP) dipped ahead of the European session’s open this morning as fears over the Omicron Covid variant rocked markets once again.
In an interview with the Financial Times, Moderna CEO Stéphane Bancel warned that existing vaccines are likely to be far less effective against the new variant and that it could take months for a new vaccine to be produced at scale.
The comments weighed on risk sentiment and, with the Pound seen as riskier currency than the Euro (EUR), GBP/EUR softened.
Sterling has maintained this downward trend so far this morning, with Brexit uncertainties continuing to act as a headwind. Northern Ireland protocol negotiations remain deadlocked, while the UK and France are embroiled in bitter disputes over post-Brexit fishing rights and cross-Channel migration.
Last week, France withdrew an invitation to Home Secretary Priti Patel to attend a meeting about the migrant crisis after Boris Johnson tweeted a letter to French President Emmanuel Macron.
Investors are concerned that souring EU-UK relations could escalate, leading to sanctions and even a trade war.
Euro (EUR) Firms on Strong Data
Meanwhile, the Euro has firmed today following some positive Eurozone data.
Earlier this morning, the latest unemployment report from Germany cheered EUR investors. Germany’s unemployment rate fell from 5.4% to 5.3% in November, as economists expected. In addition, the unemployment change figure beat expectations. The seasonally adjusted number of unemployed people in Germany fell by 34,000, compared to expectations of a 25,000 fall.
The Eurozone’s latest CPI also seems to have boosted the single currency. Headline inflation surged to 4.9% this month, the highest inflation rate since July 1991.
While Eurozone inflation has not offered the Euro much support in recent months due to the European Central Bank’s (ECB) dovish stance, recently ECB officials have been expressing more concern about the upside risks of inflation.
Pound Euro Exchange Rate Forecast: Euro to Make Further Gains?
With no more data out from either the Eurozone or the UK for the rest of the day, we may see the Pound Euro pair trade in a fairly narrow range.
GBP investors will be keeping an eye on the headlines for any new Brexit developments. Meanwhile, Omicron news could also influence GBP/EUR.
Tomorrow the Euro could make further gains. Economists expect Germany’s latest retail sales report to show a modest recovery last month. In addition, the finalised manufacturing PMIs are out, with the Eurozone’s set to trump the UK’s.