Pound Euro (GBP/EUR) Exchange Rate Struggles amid Risk-Off Mood
(Updated 15:50, 19/10/23) The Pound Euro (GBP/EUR) exchange rate remains weak today, although it managed to bounce off a three-week low hit earlier in the session.
The downside in GBP/EUR came as the market mood soured, boosting the safer Euro (EUR) and weighing on the riskier Pound (GBP).
Sterling seemingly entered oversold conditions after hitting a three-week low against the single currency, allowing GBP/EUR to recover.
However, with markets still thoroughly downbeat, the Pound Euro exchange rate remains down on the day.
At the time of writing, GBP/EUR is trading at around €1.1495, down over 0.2%.
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Pound Euro (GBP/EUR) Exchange Rate Falls in Anxious Trade
The Pound Euro (GBP/EUR) exchange rate slumped this morning as risk aversion sweeps markets.
At the time of writing, GBP/EUR is trading at €1.1480, a three-week low and down 0.4% on the day.
Pound (GBP) Slides amid Risk Aversion
The Pound (GBP) dropped this morning, as intensifying market anxiety weighs on the increasingly risk-sensitive UK currency.
Equity markets are deep in the red today, as the escalating conflict in the Middle East spooks investors.
Many had hoped that the Israel-Hamas war could be contained and resolved with diplomacy, but this seems increasingly unlikely. Many now fear that the violence will persist for quite some time, and potentially spread to other parts of the region.
The conflict adds to an increasingly fractious global geopolitical landscape, following Russia’s invasion of Ukraine and subsequent sanctions. In addition, it threatens to disrupt crude supplies and push up the price of oil, adding to global inflationary pressures.
The economic and military dangers are troubling investors today, with the bearish mood weighing on the riskier Pound.
Euro (EUR) Underpinned by Risk-Off Mood
Meanwhile, the Euro (EUR) is finding support as sentiment sours. With the single currency considered a safer investment than Sterling, skittish investors are flocking to EUR while shunning GBP.
Interest rate expectations may be limiting the Euro’s upside, after yesterday’s final consumer price index for the Eurozone confirmed a sharp cooldown in inflation last month.
European Central Bank (ECB) President Christine Lagarde also sounded cagey during a speech yesterday, and this may be serving to mute EUR today.
Nevertheless, the common currency is climbing higher against its riskier rivals as investors seek safer assets.
Pound Euro Exchange Rate Forecast: UK Sales to See Sterling Fall Further?
Looking ahead, risk appetite could continue to drive the Pound Euro exchange rate through today’s trade amid a lack of data on both sides. If the tone remains downbeat, GBP/EUR could continue to struggle.
Friday could potentially bring more losses for the Pound as economists expect the UK’s latest retail sales report to bring bad news.
According to forecasts, UK sales growth is expected to have contracted by 0.2% in September. Such a result would likely add to growing concerns around the health of the British economy, which in turn could weigh on Sterling.
Meanwhile, Eurozone data remains absent on Friday. As a result, EUR could be influenced by its strong negative correlation with the US Dollar (USD).