Pound Euro (GBP/EUR) Exchange Rate Firms amid Eurozone Economy Concerns
(Updated 09:45, 28/4/24) The Pound Euro (GBP/EUR) exchange rate touched an eight-day high this morning, after German GDP data missed forecasts.
The Eurozone’s largest economy unexpectedly stalled in the first quarter of 2023, rather than expanding 0.2%, following a downwardly revised contraction of 0.5% at the end of 2022.
🇩🇪 NEW: German economy stagnates in Q1 as GDP comes in 0.0% YoY, disappointing expectations of +0.2% growth.
At same time, regional inflation prints show slowdown in inflationary pressures.
— Julianna Tatelbaum (@CNBCJulianna) April 28, 2023
This downbeat data came ahead of the Eurozone’s first-quarter GDP results and has put some pressure on the Euro (EUR), with EUR investors now anxious that the Eurozone economy is weaker than expected.
If the Eurozone report prints below forecasts, GBP/EUR could jump higher.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Climbs as EA Data Dampens ECB Bets
(Updated 16:30, 27/4/23) After a muted start to the day’s trade, the Pound Euro (GBP/EUR) exchange rate rallied today as new Eurozone data dented the single currency.
The bloc’s latest economic sentiment indicator missed forecasts. Rather than rising from 99.3 to 99.9, the index printed at 99.3 for April, with March’s score revised down to 99.2.
Furthermore, the data reported a far larger-than-forecast fall in consumer inflation expectations. This in turn dampened European Central Bank (ECB) interest rate rise bets, thereby pressuring the Euro (EUR).
The Euro also suffered from its negative correlation to the US Dollar (USD), as the latter firmed amid renewed Federal Reserve rate hike expectations.
Meanwhile, the Pound (GBP) found its gains limited amid a lack of UK economic data.
Original article continues below:
Pound Euro (GBP/EUR) Exchange Rate Subdued in Absence of Data
The Pound Euro (GBP/EUR) exchange rate wavered lower this morning, although movement was only marginal, as a lack of UK data left Sterling exposed to losses.
At the time of writing, GBP/EUR is trading at around €1.1275, around 0.15% down on the day.
Pound (GBP) Stumbles amid UK Investment Worries
The Pound (GBP) weakened against many of its peers this morning as the UK currency lacked support amid an absence of economic data.
Meanwhile, downbeat comments about the UK’s investment attractiveness may be worrying GBP investors.
After the Competition and Markets Authority (CMA) blocked Microsoft’s acquisition of games publisher Activision Blizzard, Microsoft fired back with a withering criticism of the UK’s regulatory landscape.
Brad Smith, Microsoft’s Vice Chairman and President, argued that the EU is a better place for business than the UK. Smith said:
‘For all of us who had some hope that the UK post-Brexit, that the UK would construct a structure that would even be more flexible, that would be better for investment, better for technology, we’re now finding that the opposite appears to be true.
‘…There is a clear message here. The European Union is a more attractive place to start a business if you want someday to sell it than the United Kingdom.
‘The English Channel has never seemed wider in terms of Europe as a continent being attractive for investment’.
With no UK data for investors to focus on, these comments could be troubling GBP traders today.
Euro (EUR) Undermined by Eurozone Data Miss
Meanwhile, the Euro (EUR) is struggling to capitalise on the Pound’s weakness amid a firming US Dollar (USD) and weaker-than-forecast Eurozone data.
Earlier this morning, the Eurozone’s latest economic sentiment reading missed forecasts. Rather than rising from 99.3 to 99.9, the index rose from a downwardly revised 99.2 to 99.3.
At the same time, a recovery in USD exchange rates, following losses overnight, is pressuring EUR due to the two currencies’ negative trading relationship.
These factors have so far limited the Euro’s gains against the Pound, although it is crawling higher.
Pound Euro Exchange Rate Forecast: Upcoming Data to Cause Volatility?
Looking ahead, the Pound Euro exchange rate could move in a narrow range through much of today’s trade as investors brace for high-impact data later on.
In the afternoon, the latest GDP growth rate from the US has the potential to rock GBP/EUR. Economists expect the world’s largest economy to have expanded by 2% in the first three months of 2023, a slowdown from 2.6% growth in the previous quarter.
A strong reading could cheer markets, potentially favouring the riskier Pound over the safer Euro. However, it could also boost Federal Reserve rate hike bets, which would likely benefit the US Dollar and thereby dent EUR.
Either way, the US data could trigger some volatility.
Attention will then turn to tomorrow, when the Eurozone’s first-quarter GDP data is due out. An expected recovery in the bloc could boost the single currency.
On Friday afternoon, Germany’s latest consumer price index – a precursor to the Eurozone CPI next week – could also affect EUR. Will signs of stubbornly high inflation boost European Central Bank (ECB) rate rise bets?