Pound Euro (GBP/EUR) Exchange Rate Gains amid Risk-On Mood
The Pound Euro (GBP/EUR) exchange rate is firming today. The pairing may be seeing gains from a risk-on mood and Bank of England (BoE) rate hike bets.
On the other hand, GBP/EUR’s gains may continue to see its gains capped by hawkish language from European Central Bank (ECB) policymakers.
At time of writing the GBP/EUR exchange rate is at around €1.1297, which is roughly 0.2% from this morning’s opening figures.
Euro (EUR) Falls after Above-Forecast Eurozone PPI Slip
A return of global risk appetite may be weighing on the Euro (EUR) today. An above-forecast downturn in January’s PPI figures for the Eurozone may also be keeping pressure on EUR today. PPI declined by 2.8% in January versus the expected decline of 0.3%.
The single currency may be underpinned by hawkish language from European Central Bank (ECB) officials, however.
Speaking today in Ljubljana, ECB board member Madis Muller said:
‘It is most likely that (March) will not be the last rate rise in the cycle. It’s also quite possible that interest rates we need to stay high for quite some time.’
Also speaking in Ljubljana today was ECB policymaker Bostjan Vasle. The Slovenian central bank Governor also remained hawkish:
‘My personal expectations is that the increase we intend for our March meeting — that is 0.5 percentage points — will not be the last one.’
Pound (GBP) Firms after Upbeat Comments from BoE’s Pill
The Pound (GBP) is edging higher today. Sterling may be finding support from Bank of England (BoE) rate hike bets following an optimistic speech from Chief Economist Huw Pill on Thursday.
Speaking in London, Pill signalled that the UK’s economy was performing better than expected so far in 2023. GDP is expected to fall by less than previously forecast, pointing to a shallower recession for the UK.
Pill also highlighted the faster-than-expected pay growth as a potential reason for the BoE to continue to hike interest rates. The comments stood in stark contrast to cautious remarks from the central bank’s Governor Andrew Bailey earlier this week.
An upward revision in February’s services PMI may also be pushing GBP higher today. The PMI was revised to 53.5, pointing to the sector’s quickest pace in eight months.
GBP/EUR Exchange Rate Forecast: Will Upbeat GDP Data Bolster Sterling?
Looking to the coming week for the Pound, the British Retail Consortium’s (BRC) retail sales monitor could pull GBP lower if Tuesday’s figures print as forecast. The gauge of the sector’s health is expected to cool to 2.1% in February.
On Friday, the latest GDP figures could provide a welcome boost to the Pound if they print as expected. The UK’s economist is forecast to have expanded by 0.1% in January. The data could also help to ease fears of a deep recession in the country.
For the Euro, a forecast rebound in January’s retail sales figures for the Eurozone could push the single currency higher. January’s sales are expected to have grown by 1.3% after a drastic fall in December.
Retail sale figures for Germany, the trading bloc’s largest member, could have a similar effect on Wednesday. January’s sales are expected to grow by 2% after a 5.3% slump in December.
The final reading of German inflation data on Friday could provide a further boost to EUR. The reading is expected to confirm that inflation remained unchanged in February. The data could also prompt further ECB rate hike bets.