Pound Euro (GBP/EUR) exchange rate subdued ahead of BoE and ECB speeches
The Pound Euro (GBP/EUR) exchange rate is trapped in a narrow range this morning ahead of speeches by Bank of England (BoE) and European Central Bank (ECB) policymakers.
At the time of writing, GBP/EUR is trading at €1.1696, virtually unchanged from this morning’s opening rate.
Pound (GBP) rangebound ahead of BoE Pill commentary
The Pound (GBP) is trading sideways this morning as GBP investors await a speech from BoE Chief Economist, Huw Pill.
Recent uncertainty over when the central bank will begin cutting interest rates this year has weighed on the Pound this morning. As such, investors may look to Pill’s speech for any indication surrounding the timing of potential rate cuts this year.
Should Pill strike a dovish tone, BoE rate cut speculation could surge and in turn dent Sterling at the start of the week.
Furthermore, today will also see the release of February’s retail sales balance, from the Confederation of British Industry (CBI). A similarly abysmal reading to January’s figures may undermine the Pound.
Euro (EUR) flat in anticipation of ECB Lagarde speech
The Euro (EUR), is also treading water this morning ahead of ECB President, Christine Lagarde’s, speech later this afternoon.
Speculation the ECB raised interest rates ‘too much’ in 2023 has left EUR investors unsure on the central bank’s current monetary policy, and they will likely look to the ECB’s President for further guidance.
However, economists at Natixis Investment Banking Company have disagreed with this notion, and explained:
‘Many analysts believe that the ECB has raised interest rates too much and that these rate hikes have caused activity to stagnate in the Eurozone in 2023, and probably in 2024. We disagree with this idea, since: The unemployment rate in the Eurozone is at its lowest; We are still seeing excess demand for goods and major hiring difficulties.’
However, should Lagarde strike a cautious tone, the single currency may weaken.
Pound Euro exchange rate forecast: German consumer confidence to undermine the Euro?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate is likely to be the release of the latest GfK consumer climate indicator for Germany.
The indicator plummeted to -29.7 going into February, down from a revised figure of -25.4 in January, and striking an 11-month low.
Should consumer confidence remain weak, this may hobble the common currency.
Turning to the Pound, amid a lack of economic data releases, the driver of movement is likely to be several BoE speeches scheduled for this week.
GBP investors may focus their attention on any potential forward guidance from the central bank officials moving forward.