Pound Euro (GBP/EUR) Exchange Rate Rallies as Future Hike Potential Fails to Inspire EUR

Pound Euro (GBP/EUR) Exchange Rate Edges Higher as German Factory Orders Plummet

(Article updated 8:38, 5/5/23) The Pound Euro (GBP/EUR) exchange rate is ticking upward this morning, as the latest German factory orders nosedived.

Earlier this morning, March’s orders showed a 10.7% decline. This was far below forecasts of a 2.2% decline. By pointing to a severe decline in orders, this is weighing on the single currency at the start of today’s session.

At the time of writing, GBP/EUR is trading at around €1.1434, a rise of roughly 0.2% from the morning’s opening rates.

Original article continues below:

Pound Euro Exchange Rate Continues Climbing Despite Future Rate Hike Potential

(Article updated 16:22, 4/5/23) The Pound Euro exchange rate is continuing to climb this afternoon, despite European Central Bank (ECB) President Christine Lagarde’s assurances of further ‘work to be done’ in regards to inflation.

Following the ECB’s 25bps hike, President Lagarde delivered a speech in which she stated:

‘The Governing Council’s future decisions will ensure that the policy rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary.’

While markets have now priced in two further 25bps hikes from the ECB, this has done little to inspire the single currency. The Euro continued to fall after the perceived dovishness of the hike, and remains on a downward trend.

At the time of writing, GBP/EUR is trading at around €1.1426, a rise of roughly 0.6% from the morning’s opening rates.

Original article and previous update continue below:

Pound Euro Exchange Rate Climbs as ECB Deliver 25bps Hike

(Article updated 13:40, 4/5/23) The Pound Euro exchange rate is climbing in early afternoon trade, following the European Central Bank’s (ECB) latest interest rate decision.

The ECB pressed ahead with the expected 25bps hike, and adopted a neutral tone in their forward guidance. As such, the Euro is losing ground against most peers as investors await ECB President Christine Lagarde’s speech soon.

At the time of writing, GBP/EUR is trading at around €1.1400, a rise of roughly 0.4% from the morning’s opening rates.

Original article continues below:

Pound Euro Exchange Rate Edges Higher Ahead of ECB Rate Decision

The Pound Euro exchange rate is firming this morning, as EUR investors anticipate the latest interest rate decision from the European Central Bank (ECB).

At the time of writing, GBP/EUR is trading at around €1.1378, a rise of roughly 0.2% from today’s opening rates.

Euro (EUR) Dips ahead of ECB Interest Rate Decision

The Euro (EUR) is lacking support this morning, as investor await the afternoon’s main event. The European Central Bank are scheduled to publish their latest interest rate decision.

There remains a slim possibility that the ECB will pursue a 50bps rate hike, however the consensus has shifted to a 25bps hike. Markets further expect an additional two hikes moving toward October.

Furthermore, the Euro could see more support if the ECB takes a hawkish route. As it would signal a growing divergence from the now dovish Federal Reserve, an aggressive stance could bring cheer to EUR investors.

Elsewhere, German balance of trade data could be weighing on the Euro. The bloc’s largest economy saw an expansion in its trade surplus over March, rising to €16.7bn from €16.1bn.

However, this positivity may have been outweighed by a sharp dip in export prices. They fell by 5.2%, sharply falling from February’s 4% increase.

The German economy has a focus on exports, meaning that this sharp fall could be proving grim reading for EUR investors.

Pound (GBP) Cushioned by Above-Forecast Service Sector Growth

The Pound (GBP) is being cushioned this morning by an above-forecast final services PMI print. The index rose to 55.9, above preliminary readings of 54.9.

By pointing to continued expansion in the vital UK sector, the Pound may have been cushioned from further losses. Furthermore, a rebound in consumer spending may have reignited inflationary pressures.

Tim Moor, Economics Director at S&P Global Market Intelligence, commented:

‘Both input costs and average prices charged increased at faster rates in April, which service providers overwhelmingly attributed to greater staff wages. Some 34% of the survey panel reported a rise in their prices charged in April.’

However, a lack of other impactful data is leaving Sterling to largely trade on other currency dynamics. While gaining some ground against EUR, GBP is falling against other peers.

GBP/EUR Exchange Rate Forecast: German Factory Orders Fall to Dent EUR?

Beyond this afternoon’s ECB hike, the core catalyst of movement for the Euro could come from a duo of data releases tomorrow.

First up is German factory orders data for March. A sharp fall in orders is forecast, dropping from 4.8% to -2.2%. This severe cooldown could weaken the single currency, due to the significance of the German economy in the bloc.

This is followed by the latest retail sales data for the Eurozone. March’s stats are forecast to fall by 0.1% on a monthly basis. While likely to dent EUR, the losses may be limited as it shows a recovery from February’s dismal -0.8% print.

For the Pound, data is thin on the ground through to the week’s end. Because of this, external factors are likely to shape GBP rates. With Sterling being an increasingly risk-sensitive currency, a dip in market mood may weigh on GBP.

John Mulcahey

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