Pound Euro (GBP/EUR) Exchange Rate Remains Narrow amid Choppy Afternoon Session
Article updated 16:30, 6/10/2023
The Pound Euro (GBP/EUR) exchange rate is enduring muted trade this afternoon, following the release of impactful American data.
The US non farm payrolls data smashed forecasts, indicating room for the Federal Reserve to raise interest rates once more.
This, in turn, initially weakened the Euro due to its negative correlation with a rising US Dollar. However, over the course of the afternoon, the ‘Greenback’ appears to have lost steam, leading to wavering trade.
With little data impetus, the Pound is unable to press the advantage and rise against EUR.
At the time of writing, GBP/EUR is trading at around €1.1563, showing little movement from the morning’s opening rates.
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Pound Euro (GBP/EUR) Exchange Rate Narrows amid Middling German Factory Rebound
The Pound Euro (GBP/EUR) exchange rate is trading statically this morning, as a rebound in German factory orders fails to inspire EUR bulls.
At the time of writing, GBP/EUR is trading at around €1.1564, showing little movement from the morning’s opening rates.
Euro (EUR) Unmoved by Surprise German Factory Orders Rebound
Despite a surprisingly rebound in German factory orders, the Euro (EUR) is struggling to find its footing this morning.
In August, orders jumped by a seemingly impressive 3.9%, beating forecasts of a 1.8% increase. According to Ralph Solveen, Commerzbank Senior Economist, it ‘represented stabilization after a two-year decline.’
However, further analysis showed this was only a minor recovery for the struggling sector, following July’s sharp drop of 11.3%. Additionally, economists still believe that the German economy will contract in the fourth quarter.
As such, the vital sector in the Eurozone’s largest economy is still showing signs of embedded struggle. Whi
Bastian Hepperle, Senior Economist at Hauck Aufhaeuser Lampe Privatbank, further commented:
‘The weak external environment and the high level of uncertainty in Germany still call for caution.’
Elsewhere, the current wavering market mood could be further weighing on the common currency, due to its safer stature.
Pound (GBP) Listless as Data Drought Continues
The Pound (GBP) is continuing its recent trend of minimal movement this morning, as data remains in short supply.
However, Sterling is likely being underpinned by yesterday’s comments from Bank of England (BoE) Deputy Governor Ben Broadbent. He indicated that further interest rate rises were an ‘open question’.
During a speech, Deputy Governor Broadbent further stated:
‘It may be – and I just don’t think it’s easy to tell yet – that tighter policy has either (been) slightly weaker than in past or somewhat delayed. There are scenarios in which this embedded inflation has to be responded to further – or equally, one in which actually the weakness in the real economy accelerates.’
Yet, the lack of wider data drivers is likely preventing GBP from capitalising on this sentiment.
Furthermore, the market mood is rather quiet this morning, as investors await impactful data later in the session.
Pound Euro Exchange Rate Forecast: German Industrial Production Data in Focus
Looking ahead for the Euro, the core catalyst of movement is likely to be the latest German industrial production data. August’s release is set to print on Monday, with economists forecasting a further reduction of 0.3% month-on-month.
However, with recent upward surprises from German industrial data, the release could surprise to the upside. If production increased, EUR could strengthen.
For the Pound, data releases are set to remain few and far between. Because of this, Sterling may continue to trade without clear direction at the beginning of next week.
Elsewhere, risk appetite is likely to play a role in shaping the pairing. As an increasingly risk-sensitive currency, a shift to bearish trade could weigh on GBP.