Pound Euro exchange rate muted ahead of BoE Speeches

Pound Euro (GBP/EUR) exchange rate subdued amid data lull

The Pound Euro (GBP/EUR) exchange rate is trapped in a narrow range this morning amid a lack of market moving data.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1713, virtually unchanged from this morning’s opening rate.

Pound (GBP) rangebound ahead of BoE speeches

The Pound (GBP) is trading sideways this morning, as markets await speeches from two Bank of England (BoE) officials.

Both Swati Dhingra and Catherine Mann are scheduled to speak later today, with the former considered one of the most dovish central bank members, opposed to her most hawkish counterpart, Mann.

Should they offer conflicting outlooks on monetary policy, Sterling could experience some volatility this afternoon.

However, should the policymakers echo remarks from yesterday’s BoE official, Sarah Breeden, and support the hawkish narrative, the Pound could rise.

Breeden yesterday:

‘As I have become more confident that persistence is likely to evolve as embodied within our forecast, I have become less concerned that rates might need to be tightened further. Instead my focus, and indeed the focus of many on the MPC, has shifted to thinking about how long rates need to remain at their current level.’

Euro (EUR) muted ahead of ECB speeches

The Euro (EUR) is mostly flat this morning as an absence of market moving data leaves the single currency trading without a clear trajectory.

Amid sparse economic data, EUR investors may also turn to a number of European Central Bank (ECB) speeches today.

Policymakers Pierre Wunsch, Frank Elderson and Philip Lane will all deliver speeches later today.

A broadly dovish consensus which echoes recent comments by ECB member, Hernández de Cos, could weigh on the Euro this afternoon.

Pointing at imminent interest rate cuts, Hernández said:

‘It is crucial for European citizens to know that we are optimistic that the next move will be an interest rate reduction. Still, I believe it is appropriate not to be exact about when this will happen because that will depend on the data.’

However, should members push back on rate cut speculation, the Euro could be supported throughout the remainder of the European session.

Pound Euro exchange rate forecast: German inflation to dent the Euro?

Looking ahead, the primary catalyst of movement in the Pound Euro exchange rate on Friday will be the release of Germany’s latest inflation data.

January’s finalised figures are expected to confirm headline inflation cooled from 3.7% to 2.9%. which may drag on the single currency as it stoked ECB interest rate cut expectations.

Turing to the Pound, UK economic data will continue to be thin on the ground for the remainder of the week, which may leave Sterling trading on market mood alone.

Should markets return to upbeat trading conditions, this may lend the increasingly risk-sensitive GBP some support.

Sarah Ebrahem

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