Pound Euro (GBP/EUR) Exchange Rate Trends Sideways as Putin Annexes Ukrainian Regions
(Updated 16:33 30/09/22)
The Pound Euro (GBP/EUR) exchange rate traded within a narrow range over the remainder of Friday’s European session. The exchange rate climbed from earlier lows after Russian President Vladimir Putin announced the illegal annexation of four regions of Ukraine, whilst at the same time Ukrainian forces encircled Russian troops in Lyman.
Following the announcement, Ukrainian President Volodymyr Zelenskiy announced that Ukraine would be applying for fast-track NATO membership. The developments led to fears in the markets that the conflict could continue for longer than anticipated.
At time of writing the GBP/EUR exchange rate is at around €1.1372, nearly unchanged from this morning’s earlier figures.
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Pound Euro (GBP/EUR) Exchange Rate Slips as Eurozone Inflation Hits Record-High
(Updated 10:26 30/09/22)
The Pound Euro (GBP/EUR) exchange rate shed some of its gains this morning. The losses for the pair came after figures for the Eurozone saw inflation hit a record-high 10% in September. The rise came amid soaring energy and food prices.
The figures increased bets on a jumbo interest rate hike from the European Central Bank (ECB), likely pushing the Euro higher today. Eurozone unemployment figures also bolstered ECB rate hike bets as they remained at record-lows of 6.6%.
At time of writing the GBP/EUR exchange rate is at around €1.1369, virtually unchanged from this morning’s opening figures.
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Pound Euro (GBP/EUR) Exchange Rate Climbs as BoE Intervention Continues to Bolster Confidence
The Pound Euro (GBP/EUR) exchange rate is rising today. The positive impact of the Bank of England’s (BoE) intervention in the UK bond market is likely supporting the currency pair. A risk-on mood may also be helping to bolster GBP/EUR.
At time of writing the GBP/EUR exchange rate is at around €1.1408, which is up roughly 0.4% from this morning’s opening figures.
Pound (GBP) Rises amid Upward GDP Revision
The Pound (GBP) is climbing against its rivals today. The gains come despite persistent fears that the proposed large-scale borrowing by the UK government could worsen the country’s outlook.
Sterling may be finding support from the BoE’s continued intervention in the bond market. The reveal of last week’s mini budget saw bond yields surge, with mortgage providers withdrawing around 40% of offers.
Reports that UK Prime Minister Liz Truss is set to meet with the Office of Budget Responsibility (OBR) later today may also be bolstering GBP.
An upward revision in second quarter GDP growth figures today could be underpinning the currency. The UK economy grew by 0.2% versus a forecast contraction of 0.1%, meaning that the UK is yet to enter a recession.
Economists were quick to highlight that the revisions also meant the country’s economy is yet to return to pre-pandemic levels, however.
Euro (EUR) Slips Against GBP amid Increasing ECB Rate Hike Bets
The Euro is edging higher today despite a risk-on mood. Investors are likely betting on an above-forecast reading of Eurozone inflation later today. EUR is struggling against the Pound, however.
The hawkish expectations for the data release come after inflation in Germany hit 10% yesterday amid soaring energy costs.
The figures have likely also prompted increased bets on further interest rate hikes from the European Central Bank (ECB) today. Recent days have seen multiple ECB officials signal their desire for further action.
German unemployment data released today may dampen these expectations, however. The country’s unemployment rate remained unchanged at 5.5%, its highest level in a year.
Concerns over progress in the EU on adopting a cap on energy prices may also be weighing on the single currency today. A diplomat from one EU country said that there is ‘nothing near a consensus’.
GBP/EUR Exchange Rate Forecast: Will Eurozone Inflation Beat Forecasts?
For the Euro, Eurozone inflation figures later today could boost EUR if climb as forecast. After Germany’s hotter-than-expected figures on Thursday, analysts are anticipating an above-forecast reading for the trading bloc today.
On Monday and Wednesday, the final reading of Septembers private sector PMIs may weigh on the single currency and add to recession fears if output slips as forecast.
Wednesday will also bring the latest trade figures for Germany, the trading bloc’s largest member. The country’s trade surplus is forecast to have surged in August which could help belay Eurozone recession fears and push EUR higher.
A slump to Eurozone and German retail sales on Thursday and Friday respectively could see these gains capped, however.
Developments in European energy supplies could also cause movement in EUR next week, as well as developments in the war in Ukraine.
Looking to the coming week for the Pound, the final reading of September’s PMIs on Monday and Wednesday could pull the currency lower if they print as forecast. Output for the UK’s private sectors is expected to slip which may add to the UK’s poor long-term outlook.
The Pound may also be affected by the developing situation in the UK bond and mortgage markets next week.