Pound Euro Exchange Rate Weekly Forecast: GBP/EUR Fluctuates on UK Economic Jitters

The Pound Euro (GBP/EUR) exchange rate traded in a wide range last week. A slew of high impact UK data releases could ensure the paring remains volatile this week as well.

What’s Been Happening: GBP/EUR Exchange Rate Slips on UK Economic Concerns

The Pound Euro exchange rate fluctuated at the start of last week. The Pound’s (GBP) initial gains quickly being wiped out by lingering concerns over the Bank of England’s (BoE) bleak forecasts from the week prior.

Adding to pressure on Sterling through the middle of the week were suggestions that annual energy bills in the UK could top £4,200 from January.

This raised fresh concerns over the UK’s costs of living crisis. Particularly amid a perceived lack of action from the government to address the issue.

Closing out the week was then the publication of the UK’s latest GDP figures. A contraction of growth in the second quarter stoked recession fears and undermined the Pound.

The Euro (EUR), meanwhile, traded erratically in the first half of the week. Concerns over European energy security infusing some volatility into EUR exchange rates.

The Euro’s negative correlation with the US Dollar (USD) saw the single currency surge in the latter half of the week as USD exchange rates tumbled in the wake of a softer-than-expected US inflation print.

Three Things to Watch Out for This Week

  1. UK Inflation

Acting as a key catalyst of movement for the Pound this week will be the UK’s consumer price index. Will another acceleration of inflation exacerbate cost of living concerns and drag on GBP exchange rates?

  1. UK Retail Sales

Also influencing Sterling sentiment will be the publication of the UK’s latest retail sales figures, with another contraction in sales growth last month likely to stoke concerns over third quarter growth.

  1. German Economic Sentiment

For EUR investors the focus will be on Germany’s latest ZEW economic sentiment index. Analysts predict morale in the Eurozone’s largest economy may have seen a modest improvement this month, which could offer some support to the Euro.

GBP/EUR Forecast

The Pound Euro exchange rate is also likely to see movement on the back of the latest UK jobs report at the start of the week, while energy price concerns may continue to infuse volatility into the pairing.

Matthew Andrews

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