Pound Euro exchange rate muted ahead of central bank speeches

Pound Euro (GBP/EUR) exchange rate subdued in anticipation of central bank speeches

The Pound Euro (GBP/EUR) exchange rate is trapped in a narrow range this morning, as investors hold off placing any aggressive bets ahead of Bank of England (BoE) and European Central Bank (ECB) speeches later today.

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 before Bailey address

The Pound (GBP) is trading sideways this morning against the majority of its peers.

An absence of market-moving data today has left GBP investors eyeing the latest Bank of England speech from the central bank’s Governor, Andrew Bailey, expected later today.

On the back of last week’s hawkish rhetoric from BoE official Johnathon Haskel, where the policymaker pushed back on any potential interest rate cuts in the spring, if Bailey echoes his colleague’s sentiment today, GBP could strengthen.

Keeping GBP exchange rates afloat thus far is a cautiously upbeat market mood, which is underpinning the increasingly risk-sensitive Sterling this morning.

Euro (EUR) flat ahead of ECB speeches

The Euro (EUR) is treading water against the majority of its counterparts this morning, as a lack of economic data leaves EUR investors awaiting a slew of ECB speeches, also expected today.

In a keynote speech delivered earlier this morning, ECB Chief Economist Philip Lane commented on the usefulness of recent Eurozone data, however pointed to his concerns over ‘measuring issues’ surrounding the overall economic outlook.

An excerpt from Lane’s speech read:

‘In my remarks today I have focused on euro area financial flows in the current context of the monetary policy tightening cycle and geopolitical tensions. I have stressed the usefulness of available data for the regular analysis we do at the ECB, but I have also highlighted the areas where measurement issues still hamper our full understanding of portfolio investment and foreign direct investment exposures.’

Lane is also expected to speak again, later this afternoon. Should the policymaker continue to strike a fairly cautious tone around the uncertain impacts of high interest rates, the single currency could slide in the latter stages of the session.

Pound Euro exchange rate forecast: UK jobs data to undermine the Pound?

Looking ahead, the Pound Euro exchange rate will most likely be driven by the release of the UK’s latest unemployment and average earnings) figures, expected tomorrow.

Unemployment in the UK is forecast to have risen in the three months to December, from 3.9% to 4%, whilst average earnings are expected to have cooled from 6.6% to 6% in the same period. The Pound could slump should the data match expectations, as it may stoke bets on coming BoE rate cuts.

Turning to the Euro, the latest ZEW economic sentiment index for Germany is predicted to show another increase in morale in February. Should the data print as expected, this could in turn boost EUR exchange rates.

Sarah Ebrahem

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