Pound Euro (GBP/EUR) Exchange Rate Trades Sideways as Markets Mull Next BoE Rate Decision

Pound Euro Exchange Rate Flat amid Lull in UK Data

The Pound Euro (GBP/EUR) exchange rate trades in a narrow range this morning. A lull in UK economic releases leaving the pairing without any trading stimuli.

At the time of writing the Pound Euro exchange rate is trading at around €1.1519. Virtually unchanged from this morning’s opening rate.

Pound (GBP) Steady amid BoE Rate Hike Speculation

The Pound (GBP) is rangebound this morning as a brief lull in the UK’s data calendar gives GBP investors some time to digest recent releases.

Aside from July’s weaker-than-expected GDP print, UK data has been broadly upbeat this week. The UK’s latest jobs report and core inflation figures both printing above expectations.

The high-impact releases are stoking speculation regarding the Bank of England’s (BoE) upcoming interest rate decision.

Some GBP investors are growing confident the BoE will pursue a 75bps rate hike next week. So far however, investors remain cautious, leaving the GBP/EUR exchange rate to remain in a holding pattern for now.

Economists at ING comment:

‘In a very busy week for the UK economic calendar, we don’t get any major releases today.

‘Markets are currently pricing in 67 bps of tightening at next week’s BoE meeting, and we see a good probability of markets fully pricing in a 75 bps hike in the coming days. That could offer a bit of help to Sterling into the BoE announcement, but GBP/EUR looks unlikely to make any big moves outside its recent range for now.’

Euro (EUR) Stable amid Ukraine Optimism

The Euro (EUR) also trades sideways this morning as EUR investors continue to have one eye on events in Ukraine.

Ukraine’s successful counteroffensive against Russian forces in the east of the country propelled the Euro sharply higher earlier this week.

EUR investors are hopeful that the success of Ukrainian forces could bring about a swifter-than-expected end to the war.

However recent strikes by Russia against infrastructure targets have curbed this optimism somewhat. Which alongside a rebound in the US Dollar (USD) is limiting the Euro’s upside potential this morning.

Pound Euro Exchange Rate Forecast: Slump in UK Retail Sales to Drag on Sterling?

The Pound Euro (GBP/EUR) exchange rate might face some pressure at the end of this week, with the publication of the UK’s latest retail sales figures.

August’s figures are expected to report a contraction in sales. Economists forecast sales growth will have slumped from 0.3% to –0.5%.

This is likely to fuel concerns over the UK’s economic performance in the third quarter. Will recession fears lead investors to shun the Pound?

Meanwhile, Friday will also see the release of the Eurozone’s latest inflation release.

If August’s finalised figures see inflation revised higher we could see the Euro soar as it bolsters expectations for another 75bps rate hike from the ECB next month.

Matthew Andrews

Contact Matthew Andrews

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