Pound Euro (GBP/EUR) Exchange Rate Remains Stagnant Despite Bullish Trade
(Article updated 16:18, 3/4/23) The Pound Euro (GBP/EUR) is remaining limited in movement this afternoon, despite upbeat trade.
With data releases scarce throughout the session, the lack of impetus is keep a lid on both currencies. However, the Euro could be seeing a boost from a particularly disappointing PMI release in the US. March’s manufacturing index pointed to further contractions in the sector.
With the pairing holding a negative correlation, this may be cushioning the single currency against Sterling.
At the time of writing, GBP/EUR is trading at around €1.1383, showing little movement from the morning’s opening rates.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Rangebound as Thin Data Calendar Prevents Movement
The Pound Euro (GBP/EUR) exchange rate is trading in narrow boundaries this morning. A thin data calendar for both sides of the pairing is serving to keep the rates flat.
At the time of writing, GBP/EUR is trading at around €1.1374, showing minimal movement from the morning’s opening rate.
Pound (GBP) Wavers amid Thin Data Calendar
The Pound (GBP) is being undermined by a lack of data today, prompting GBP to trade without much direction.
Furthermore, the final manufacturing index print earlier today may be sapping sentiment. The index shows that March’s activity in the sector contracted further than preliminary readings expected.
While the UK’s economy relies more on services, it still points to underlying weakness and may be causing some anxiety for investors.
Rob Dobson, Director at S&P Global Market Intelligence, commented on the release. He stated:
‘Although total new orders saw a fractional increase, this followed on from a nine-month sequence of contraction and suggests that order book levels remain low overall. Declining new export order intakes remain a significant drain on demand, offsetting signs of a modest revival in the domestic market.’
Elsewhere, a fluctuating market mood could be adding minor tailwinds to Sterling today. Risk appetite appears to be in flux, which could be giving a touch of support to the increasingly risk-sensitive currency.
Euro (EUR) Boosted by Eurozone Manufacturing Uptick
The Euro (EUR) is being supported today by a better-than-expected final manufacturing reading. March’s activity printed higher than preliminary readings suggested.
Because of this, while the data still remains in contractionary territory, the upbeat reading is cheering investors.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated:
‘Fortunately, a record improvement in supplier lead times and greater input availability has allowed firms to fulfil orders placed in prior months, meaning output has been broadly flat over the past two months.’
So, while there was modest improvements as the sector cleared it’s backlog, the future remains less clear. As such, the common currency’s gains may be being capped.
Elsewhere, safe-haven flows could be underlining the Euro today. With oil prices on the rise after OPEC+’s announcement of a supply cut, inflation fears are resurfacing.
GBP/EUR Exchange Rate Forecast: German Data in Focus
Looking ahead for the Euro, a key driver of movement may be the German balance of trade data for February. Due to print on Tuesday, this could bring tailwinds for the common currency as the German trade surplus is forecast to expand.
Furthermore, the latest German factory orders data is due to print on Wednesday. February’s activity is forecast to have slowed to 0.4%. If this prints accurately, EUR could weaken on signs of slowing activity in the bloc’s largest economy.
Meanwhile for the Pound (GBP), the data release calendar appears slender. As such, market sentiment and external factors are likely to sway the currency.
If the market mood becomes more upbeat, Sterling’s increasingly risk-sensitive nature could gain it some support.