Pound Euro Exchange Rate Remains Muted Following Tuesday’s Plunge
The Pound Euro (GBP/EUR) exchange rate its trading at a three-month low this morning as hopes for a negotiated end to the war in Ukraine continues to underpin the single currency.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1798, virtually unchanged from this morning’s opening rate.
Euro (EUR) Maintains Bullish Momentum amid hopes for Peace in Ukraine
After soaring roughly 1% on Tuesday, the Euro (EUR) continues to draw support this morning amidst hopes of a ceasefire in Ukraine.
High-level talks between Ukraine and Russia appeared to finally deliver a breakthrough yesterday, with Moscow promising to ‘radically reduce military activity’ around Kyiv and Chernihiv.
The news spurred a sharp upswing in the Euro, which has suffered significantly over the past month amidst concerns over the potential economic fallout from the conflict.
Markets are hopeful Tuesday’s ‘constructive’ talks will be the first step towards a full ceasefire.
This has bolstered expectations the European Central Bank (ECB) could raise interest rates later this year. Alongside a surge in German bond yields this is helping to underpin demand for the Euro this morning.
On the other hand, the Euro’s gains may be tempered this morning by early signs that Russia has not begun to scale back its attacks around Kyiv and Chernihiv.
Chernihiv Governor Viacheslav Chaus, said:
‘The ‘decreased activity’ in the Chernihiv region was demonstrated by the enemy carrying out strikes on Nizhyn, including air strikes, and all night long they hit Chernihiv.’
Pound (GBP) Buoyed by Positive Mood
While it is struggling against the Euro, the Pound (GBP) has been able to tick higher against most of its other peers as Sterling sentiment also benefits from hopes for a negotiated end to the war in Ukraine.
The prospect of peace has helped to ease concerns regarding the UK’s cost-of-living crisis. The conflict is thought to have stoked inflationary pressure over the past month.
Speaking this morning Bank of England (BoE) Deputy Governor Ben Broadbent, said:
‘The Russian invasion of Ukraine has led to substantial rises in the cost of energy and other commodities. In the near term in the difficult combination of even higher inflation but weaker domestic demand and output growth.’
Pound Euro Exchange Rate Forecast: German Inflation in the Spotlight
Still to come today is the publication of Germany’s consumer price index. March’s preliminary CPI figures are forecast to report inflation in the Eurozone’s largest economy rocketed up from 5.1% to 6.3%.
The jump in inflation may place additional pressure on the Pound Euro (GBP/EUR) exchange rate this afternoon. With another spike in inflation potentially placing more pressure on the European Central Bank (ECB) hike interest rates this year.
Meanwhile, with GBP data still thin on the ground until Friday’s GDP release, the Pound could struggle to find momentum.