Pound Euro (GBP/EUR) Exchange Rate Trades Sideways despite UK Concerns
The Pound Euro (GBP/EUR) exchange rate initially dipped this morning but managed to bounce back, trading sideways overall.
At the time of writing, GBP/EUR is trading at around €1.1615, marginally down from the start of today’s European trade.
Pound (GBP) Wavers amid Mixed Data
The Pound (GBP) slipped as today’s European session began after new data revealed a decline in UK housing prices.
Month over month, housing prices contracted by 0.9% in October. Higher interest rates and the worsening income crunch have squeezed demand, exacerbated by the government’s short-lived mini-budget at the end of September.
Experts believe this could be the beginning of a long downturn as the UK economy slides into recession.
However, Sterling quickly rebounded following this dip.
A slightly better-than-expected UK manufacturing PMI may have helped to prop up the Pound. Although factory activity shrank in October, the final survey revealed that the contraction was not as deep as initially feared.
Still, both sets of data point to an economy in recession, which could weigh on the Pound as the day goes on.
Euro (EUR) Buoyed by USD Weakness
Meanwhile, the Euro (EUR) is muted today as some Eurozone countries shut up shop for All Saints’ Day. The thin trading conditions have left the single currency subdued.
That said, the Euro is supported by its negative correlation to a weakening US Dollar (USD). The safe-haven Dollar is in decline today amid a risk-on rally in markets, which in turn is lending support to EUR exchange rates.
As a result, the single currency is managing to stay afloat against Sterling.
Pound Euro Exchange Rate Forecast: GBP/EUR to Trade in a Narrow Range?
As today’s session unfolds, the Pound Euro exchange rate could continue to trade in a narrow range amid a lack of any more market-moving calendar events from either the Eurozone or the UK.
That said, other factors could influence the pair. Domestic political news could apply some pressure to GBP. Although the turmoil of the last few months has all but faded, Prime Minister Rishi Sunak is coming under increasing pressure for his reappointment of Home Secretary Suella Braverman, who had resigned six days before Sunak entered Number 10 for breaching the ministerial code. Signs that political instability could return to the UK may weigh on Sterling.
Meanwhile, US economic data could impact the Euro due to the EUR/USD negative correlation. If stronger-than-expected American data boosts USD, EUR could stumble.