Pound Euro (GBP/EUR) Exchange Rate Remains Rangebound
(Updated 16:45, 26/4/23) The Pound Euro (GBP/EUR) exchange rate has continued to trade in a narrow range today, having recouped some of the marginal losses suffered earlier.
The Euro (EUR) got off to a fairly strong start today as a weaker US Dollar (USD) and upbeat German data lifted the common currency.
However, the Pound (GBP) also found support, keeping the pairing confined to a narrow range.
Sterling then enjoyed surprisingly upbeat sales data. The Confederation of British Industry’s (CBI) distributive trades survey rose from 1 to 5, rather than dropping to 0.
Furthermore, a pullback in Federal Reserve interest rate rise bets cheered markets. This aided the riskier Pound versus the safer Euro.
Over the course of the day, GBP/EUR softened slightly from €1.1305 to €1.1272, but has since climbed back up to €1.1295 – only marginally down.
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Pound Euro (GBP/EUR) Exchange Rate in a Tight Range
The Pound Euro (GBP/EUR) exchange rate posted modest losses this morning, although both currencies were finding success elsewhere, as multiple factors played on the pairing.
At the time of writing, GBP/EUR is trading at around €1.1295, marginally down on the day.
Euro (EUR) Enjoys Upbeat German Data
The Euro (EUR) rose against many of its peers this morning, with multiple factors affecting the single currency.
Early in the morning, positive German data boosted the Euro. German consumer confidence rose for the seventh consecutive month heading into May, hitting its highest level in over a year. This in turn has boosted optimism over the ongoing recovery in the Eurozone’s largest economy.
The common currency is also enjoying its negative correlation to the US Dollar (USD), which is facing selling pressure this morning.
However, the single currency’s upside may be limited by fears over both the Russia-Ukraine crisis and the European banking sector.
This morning, news broke that two Russian fighter jets and a heavily armoured ground-attack aircraft were intercepted by German and British pilots in international airspace over the Baltic Sea.
Furthermore, there are growing concerns that Russia may drag its ally Belarus into the war, as Belarusian citizens are called up to attend military training.
Meanwhile, recent worries about the potential collapse of another US bank – First Republic – have spread into European markets. Anxiety over fresh banking sector turmoil could be hampering EUR’s upside today.
Pound (GBP) Holds Strong without Clear Catalyst
As for the Pound (GBP), Sterling has so far managed to resist steeper losses against the Euro, with the UK currency making gains elsewhere.
There isn’t a clear fundamental driver for Sterling’s gains today. Instead, it may be a correctional move after the Pound lost ground yesterday.
Another possible factor that could be underpinning the Pound today is the likelihood of another Bank of England (BoE) interest rate rise at its meeting next month. Forecasters see the bank raising rates by another 25bps, with the possibility of more rate hikes in the future.
Pound Euro Exchange Rate Forecast: GBP/EUR to Remain Rangebound?
Looking ahead, the Confederation of British Industry’s (CBI) latest distributive trades survey could see the Pound soften.
Economists expect the survey to show that UK retail activity stalled this month. Such a result could add to growing worries about the country’s fragile economy, thereby potentially denting GBP.
As for the Euro, fears in the European banking sector could keep a lid on EUR’s gains against GBP. If bank shares continue to sell off today, the single currency could come under pressure.
Russia-Ukraine worries may also mute the Euro’s movement. Any further signs or dangers of a potential escalation in the conflict could worry EUR investors, thereby denting support for the common currency.