Pound Euro (GBP/EUR) Exchange Rate Rangebound Following German Data
The Pound Euro (GBP/EUR) exchange rate is treading water this morning, following the publication of Germany’s latest inflation figures.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1658, virtually unchanged from this morning’s opening rate.
Euro (EUR) Fluctuates following German Inflation Report
The Euro (EUR) is currently trading sideways, following the publication of Germany’s consumer price index.
November’s finalised CPI figures confirmed German inflation cooled from 3.8% to 3.2%, marking the lowest rate of inflation since June 2021.
The initial response to the data triggered a modest drop in the Euro, as the slowdown in inflation is likely to stoke expectations the European Central Bank (ECB) will begin cutting interest rates next year.
However, the single currency was quick to erase these losses and is now trading in a narrow range against most of its peers.
Later today, the US’s non-farm payrolls data is due to be released. The Euro’s negative correlation with the US Dollar (USD) could Trigger some volatility in EUR exchange rates depending on how the data impacts the ‘Greenback’.
Pound (GBP) Muted amid Lull in Data
The Pound (GBP) remains mostly subdued this morning amid the continued absence of any market moving UK data.
Sterling’s upside potential also appears limited in the wake of a speech by Bank of England (BoE) Governor, Andrew Bailey, where he expressed a slightly more cautious tone to that of previous addresses, markets may now be mindful of a potential end to BoE interest rates hikes.
Bailey said:
‘Rates are likely to need to remain at these levels for an extended period to bring inflation back to target on a sustained basis…. The full effect of higher interest rates is yet to come through. Therefore, we remain vigilant to financial stability risks that might arise.’
With his use of slightly less hawkish language and a continued lack of UK data, this may leave GBP vulnerable today.
Pound Euro Exchange Rate Forecast: Pound to Slump if UK Employment Rises?
Looking ahead to the start of next week, the Pound Euro exchange rate could face some pressure with the publication of the UK’s latest jobs report.
October’s data is forecast to show a fall in average earnings, at the same time that unemployment is expected to rise.
Could this weaken BoE interest rate expectations heading into the bank’s latest policy meeting later in the week.
Meanwhile, Germany’s economic sentiment index is scheduled for release on Tuesday. December’s index is expected to report that morale in the Eurozone’s largest economy weakened slightly, but that overall sentiment remains positive. Could this lend some support to the Euro on Tuesday?