Pound Euro Exchange Rate Fluctuates amid Mounting UK Headwinds
The Pound Euro (GBP/EUR) exchange rate is trading erratically this morning amid growing economic fears surrounding the UK. Meanwhile, the escalating conflict in Ukraine is keeping the Euro under pressure.
At time of writing the GBP/EUR exchange rate is trading around €1.1361, relatively unchanged from this morning’s opening levels.
Pound (GBP) Undermined by Relentless Economic Fears
The Pound is under pressure once again today as a lack of major economic data is leaving it vulnerable to a myriad of domestic woes. Former Bank of England (BoE) Chief Economist Andy Haldane warns of further pain for the economy amid soaring mortgage rates and tumbling real wages.
The recent political chaos has also weighed heavily on the economy, and concerns that the UK will continue to lag behind other economies. Haldane commented that the Covid crisis swiftly followed by the cost-of-living crisis has unleashed huge amounts of financial stress on businesses and households. Haldane added:
‘We’ve had a lost decade and a half in terms of pay rises in inflation-adjusted terms. Last year we saw real pay fall and we’ll most likely see the same happen again and that is putting acute financial stress and indeed mental stress on a great many households, that’s one consequence of the absence of growth, or certainly anaemic growth that we’ve seen.’
Euro (EUR) Under Pressure from Escalating Conflict
Meanwhile, the Euro is struggling for a clear direction this morning as a lack of major data has left the single currency exposed to market sentiment.
Explosions rocked Kyiv in the wake of the West sending tanks to Ukraine. After Germany announced it will be sending Leopard tanks to Ukraine, the US followed and pledged 31 M1 Abrams tanks.
In response, Dmitry Peskov, spokesperson for the Kremlin, commented that sending tanks is seen as ‘direct involvement’ from the west. Fears are mounting of the conflict escalating, sapping demand for the Euro.
Pound Euro Forecast: Early UK Retail Sales Data to Sink Sterling?
Looking ahead, the Pound Euro exchange rate could see the majority of movement dictated by market mood and domestic woes.
However, the CBI distributive trades survey will be released later this morning. An early indicator to the state of UK retail sales could weigh on Sterling. An expected fall could further highlight the economic strain consumers are under.
Meanwhile, any further developments out of Ukraine could weigh on the Euro. Russia’s aggressive response to the West sending tanks could deter investors with the conflict escalating.