Pound Euro (GBP/EUR) Exchange Rate Flat amid Short Supply of Data
The Pound Euro (GBP/EUR) exchange rate is trading within narrow boundaries this morning, due to a lack of wider impetus.
At the time of writing, GBP/EUR is trading at around €1.1491, showing little movement from the morning’s opening rates.
Pound (GBP) Remains Stagnant amid Lack of Data
The Pound (GBP) is continuing its recent run of tepid trade this morning, as the data drought continues in earnest.
With little data for investors to sink their teeth into, the focus is remaining on next week’s interest rate decision. The Bank of England (BoE) are widely expected to maintain the current pause, likely showing that the cycle has ended.
Francesco Pesole, FX Strategist at ING, stated:
‘With less than a week to go to the Bank of England meeting and the MPC members in the black-out period, markets have cemented their view there will be no change at any of the upcoming policy meetings.’
Markets now anticipate -9bps of tightening, a significant shift from expectations earlier in the year. However, inflation still remains very high and the cost-of-living crisis continues to weigh on UK households.
Euro (EUR) Muted post ECB Pause
The Euro (EUR) is enduring muted trade this morning, as investors continue to digest yesterday’s decision by the European Central Bank (ECB).
The bank ended its 10-month interest rate hiking cycle yesterday, keeping rates paused at 4.5%. Additionally, ECB President Christine Lagarde declined to offer additional forward guidance, instead keeping the EU economy in focus.
With the outlook remaining poor, investors appear hesitant to support the common currency, and have begun to pare back any remaining hike bets.
Francesco Pesole, FX Strategist at ING, commented:
‘It is clear now that the euro will not be able to draw any substantial benefit from a more hawkish ECB, and markets have all the reasons to keep rate expectations depressed on the back of the deteriorating growth outlook.’
Elsewhere, a tentatively optimistic market mood could be further weighing on the Euro. As a safer asset, the subtle bullish tilt is seeing investors eye riskier currencies.
Pound Euro Exchange Rate Forecast: German CPI in Focus
Looking ahead to early next week for the Euro, Monday brings the release of October’s German consumer price index data.
Economists have forecast a sharp cooldown, with the figure falling from 4.5% to 4% in October. If this prints accurately, the common currency could weaken as it may prompt reduced rate hike bets.
On Tuesday, the latest GDP growth rate is due for release. The expectation here is that the Eurozone economy will have contracted by 0.1% in the third quarter. If accurate, EUR may weaken.
Furthermore, if inflation in the bloc cools as expected, the common currency may see severe volatility.
For the Pound, data releases remain thin on the ground at the beginning of next week’s session. As such, GBP exchange rates may remain trapped in narrow boundaries.
Additionally, risk appetite is likely to play a role in shaping the exchange rate. If trading conditions sour, the safer Euro may strengthen against Sterling.