Pound Euro (GBP/EUR) Exchange Rate Slips amid Improving German Outlook
The Pound Euro (GBP/EUR) exchange rate stumbled this morning after a rise in German household confidence gave the common currency a boost. However, a risk-on mood is shoring up the Pound (GBP) and preventing any notable losses so far.
At the time of writing, GBP/EUR is trading at around €1.1365, down marginally on the day.
Euro (EUR) Firms as German Consumer Confidence Rises
The Euro (EUR) wavered higher this morning following Germany’s latest consumer confidence report from market research company GfK.
Household morale in the Eurozone’s largest economy improved heading into April, hitting its highest point since July 2022.
However, even though the indicator rose from -30.6 to -29.5, this was slightly below expectations of a rise to -29.2 Additionally, the consumer confidence score remains in negative territory.
Commenting on the results, GfK Consumer Expert Rolf Bürk said:
‘Income expectations are currently benefiting from the recent noticeable drop in energy prices, especially for gas and heating oil. Nevertheless, inflation will remain high this year…’
‘The expected loss of purchasing power is preventing a sustained recovery in domestic demand. Accordingly, private consumption is unlikely to make a positive contribution to economic growth in Germany this year. This is also signalled by the still very low level of consumer sentiment.’
The improvement in consumer confidence has lent EUR some support. However, the lingering concerns seem to be capping the upside.
Pound (GBP) Stumbles despite Risk-On Mood
Meanwhile, the Pound is vulnerable this morning amid a lack of notable UK economic data.
An upbeat market mood is failing to lift the riskier Pound against the safer Euro, although this may be limiting its losses. Investors remain upbeat as calm returns to the US and European banking sectors, and hopes of an end to the aggressive hiking cycles of the world’s central banks are also boosting the mood.
Pound Euro Exchange Rate Forecast: Central Bank Speakers to Prompt Volatility?
Looking ahead, the risk-on tone and the caveats surrounding Germany’s consumer confidence score could limit EUR’s gains against GBP. If the market mood remains upbeat, the pairing could fluctuate and Sterling may recoup some losses.
Later this evening, one policymaker each from the Bank of England (BoE) and the European Central Bank (ECB) are due to speak.
First up is the BoE’s Catherine Mann, one of the most hawkish voices on the bank’s Monetary Policy Committee (MPC). If Mann advocates further interest rate rises – citing elevated inflation and the UK’s apparent economic resilience – then Sterling could rally.
ECB policymaker Isabel Schnabel will speak two hours later. Schnabel is also known as a bit of a hawk, so her comments could boost the Euro.