Pound Euro (GBP/EUR) Exchange Rate Slips Again, Zigzagging Lower Overall
(Updated 16:50, 20/4/22) The Pound Euro (GBP/EUR) exchange rate has once again slipped to the downside. Overall today, GBP/EUR has zigzagged lower as mixed factors play on both currencies.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Rebounds amid BoE-ECB Uncertainty
(Updated 15:00, 20/4/22) The Pound Euro (GBP/EUR) exchange rate reversed this morning’s losses after hitting a one-week low earlier today.
The initial downside in the Pound (GBP) came as the UK’s political woes worried GBP investors.
Meanwhile, the Euro (EUR) enjoyed better-than-expected trade data and some hawkish remarks from Mārtiņš Kazāks, a policymaker at the European Central Bank (ECB). Kazāks said that an ECB rate hike could come as early as July.
However, the ECB is still lagging behind the Bank of England (BoE) in terms of monetary policy. The BoE has already hiked three times, bringing the Bank Rate to pre-pandemic levels, and more rises are likely on the way.
As a result, EUR was unable to hold its gains as investors repositioned based on central bank policy expectations.
GBP/EUR slipped from around €1.2044 at the open of today’s European session to a low point of €1.2002. At the time of writing, the Pound Euro pair is trading at €1.2046.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Slips amid ‘Partygate’ Scandal and EA Trade Data
The Pound Euro (GBP/EUR) exchange rate has fallen today as the threat of political instability in the UK undermines Sterling.
Meanwhile, better-than-expected trade figures from the Eurozone are supporting the single currency.
Pound (GBP) Falters as ‘Partygate’ Worries Investors
The Pound (GBP) is on the back foot this morning as investors mull the possible implications of the ‘partygate’ scandal.
Yesterday, Prime Minister Boris Johnson apologised to MPs once again for breaching lockdown laws after the police issued him with a fine. Despite calls from the opposition and some Tory MPs, Johnson plans to stay on as PM. MPs will vote on Thursday on whether Johnson should be investigated for misleading parliament.
There are fears that the scandal is distracting the government from dealing with the two crises currently affecting the UK: the Russia-Ukraine war and the cost-of-living crunch. In addition, the uncertainty over whether Boris Johnson will be ousted is also pressuring the Pound.
Euro (EUR) Firms as Trade Figures Beat Forecasts
Meanwhile, the Euro (EUR) is climbing after the Eurozone’s latest trade figures exceeded forecasts.
Economists had expected the bloc’s balance of trade to fall from €-27.2bn in January to €-29bn in February. This would have been the widest trade deficit on record for the Eurozone, which usually operates at a trade surplus.
Instead, the trade deficit narrowed by €20bn to €-7.6bn. Although the surging costs of energy imports continue to hurt the bloc’s balance of trade, exports also rose steeply.
Additionally, Eurozone industrial production recovered from January’s contraction, rising by 0.7%, as expected.
These relatively upbeat data releases are supporting the Euro today, helping it rise against a subdued Pound.
Pound Euro Exchange Rate Forecast: Could Negative Ukraine News Hurt EUR?
GBP/EUR may continue its current trend through today’s session amid a lack of any further data for either currency.
One factor that could cause some movement, however, is the Ukraine crisis. At the time of writing, the mood is somewhat upbeat, as evident in equity markets. If there are any significant negative developments in Ukraine, this could weigh on the Euro and allow Sterling to regain some ground.
Turning to tomorrow, a speech from Bank of England (BoE) policymaker Catherine Mann could affect GBP. Will she maintain a dovish tone after last week’s hot inflation rate reading?
Meanwhile, another forecast drop in Eurozone consumer confidence could hurt EUR.