Pound Euro (GBP/EUR) Exchange Rate Rises amid Improving Sentiment
The Pound Euro (GBP/EUR) exchange rate gained ground this morning as a risk-on mood in European markets lifted Sterling against the safer single currency.
At the time of writing, GBP/EUR is trading at €1.1434, up marginally on the day.
Pound (GBP) Firms amid Cheery Market Mood
The Pound (GBP) managed to rise against the Euro (EUR) this morning, despite a lack of notable UK economic data.
Sterling’s upside comes as risk appetite returns to markets, which is supporting the riskier Pound over the safer single currency. European equity markets are in the green as investors grow more optimistic about the global economic outlook following recent signs of resilience in some of the world’s largest economies.
However, GBP may find its gains capped as the absence of any market-moving economic data limits the currency’s upside potential.
Euro (EUR) Cushioned by Upbeat German Data
Meanwhile, the Euro may be resisting steeper losses following some positive German data this morning.
Industrial production in the Eurozone’s largest economy rose by 2% in February, far above expectations of a meagre 0.1% rise.
Today’s production data is the latest indication of a recovery in Germany’s vital manufacturing sector, after German factory orders smashed forecasts yesterday to print at 4.8% rather than 0.3%. Economists expect the sector to recover further in the coming months as the headwinds from the Covid pandemic and Russia’s invasion of Ukraine continue to fade.
Franziska Palmas, Senior Europe Economist at Capital Economics, commented:
‘A high backlog of orders, lower energy prices and easing supply constraints should continue to support production’.
So far, this strong data seems to have fed into the positive European market mood, which is supporting Sterling against the single currency. However, it may begin to lift the Euro as the session unfolds.
Pound Euro Exchange Rate Forecast: Sterling to Hold Strong?
Looking ahead, the market mood could determine GBP/EUR movement through today’s session. If the tone remains upbeat, Sterling could strengthen against the single currency.
There is the possibility, however, that the recent strong German data will begin to offer support to the Euro, trimming GBP/EUR’s gains.
Later on, movement in the US Dollar (USD) could influence the currency pairing, due to EUR’s negative correlation with USD. If the latest American initial jobless claims data boosts the US Dollar, then the Euro could come under pressure.