Pound Euro (GBP/EUR) Exchange Rate Flat amid Economic Pessimism
The Pound Euro (GBP/EUR) exchange rate is rangebound today as concerns for the health of both the Eurozone and the UK economies continue to limit investor interest in the currency pairing.
At the time of writing the GBP/EUR exchange rate is trading at $1.1485, virtually unchanged from this morning’s opening rate.
Euro (EUR) Weak as Retail Sales Shrink
The Euro (EUR) is choppy this morning as continually bleak data readings sour EUR sentiment.
After clawing back some of yesterday’s losses, the Euro now faces selling pressure once again amid weaker-than-expected retail data. The Eurozone’s retail sales data for September came in slightly below forecast, at -0.3%. Declining consumer activity in the Eurozone underpins yesterday’s concerns of economic slowdown, which were sparked by weak German industrial data.
Also undermining the Euro’s movements today is an uptick in the US Dollar (USD), bolstered by risk aversion. The Euro’s negative correlation with the ‘Greenback’ could see the single currency struggle as the session continues, should trade remain cautious.
Similarly, a lack of upbeat data may leave the common currency at risk of freefall as economic concerns swell within the Eurozone.
Pound (GBP) Struggles amid Data Lull
The Pound (GBP) is stumbling this morning amid a lack of notable UK data.
Sterling managed to firm against riskier currencies overnight as trade became increasingly cautious, though ultimately struggled against its safer peers.
With data thin on the ground today, investors turn to the UK’s economic outlook. Concerns surrounding the health of the UK economy continue to stifle GBP movement ahead of key GDP data due on Friday.
Also limiting the Pound’s upside potential today is recent dovish commentary from Bank of England (BoE) officials.
Huw Pill, Chief Economist at the BoE, triggered a decline in interest rate hike bets with assertions of cooling inflation and future rate cuts. Pill said:
‘If we have the restrictive policy for too long, then the danger is… we trigger a recession, we trigger an excessive slowdown in the economy’.
Following last week’s seemingly hawkish hold on interest rates, investors are now replacing their bets amid contrasting statements from BoE officials and a gloomy economic outlook, leaving GBP to face headwinds.
Pound Euro Exchange Rate Forecast: ECB Speeches to Boost EUR?
The Euro could be influenced by European Central Bank (ECB) commentary later today. Policymaker Andrea Enria and Governor Pablo Hernández de Cos are due to speak this afternoon. Should either echo the central bank’s recently dovish tone, EUR may slump. However, any indication of hawkish movement regarding monetary policy could function to boost ECB rate hike bets, thereby bolstering the common currency.
Looking to the UK, data remains sparse until the end of the week. On Friday the UK’s GDP data for the third quarter is due out. Sterling may plummet if GDP prints as expected at -0.1%. A decline from the second quarter’s 0.2% is likely reinforce recent UK recession fears.
A lack of notable data in the meantime could leave the Pound vulnerable to external factors. The increasingly risk-sensitive Pound could harness some support against its safer peers if cautious trade shifts, becoming upbeat. However, investor confidence in GBP could be undermined by the UK’s ongoing economic anxieties.