Pound Euro (GBP/EUR) exchange rate flat amid mixed German data
The Pound Euro (GBP/EUR) exchange rate is narrowing this morning, amid mixed economic data from Germany.
At the time of writing, GBP/EUR is trading at around €1.1679, showing little movement from the morning’s opening levels.
Euro (EUR) muted amid mixed German data
The Euro (EUR) is largely static this morning, amid a series of underwhelming German economic data releases.
Retail sales in January printed notably below expectations. Markets were anticipating a 0.5% increase on a monthly basis, but the data instead showed a 0.4% decrease.
This suggests that consumer spending continues to fall in the Eurozone’s largest economy. The outlook remains bleak for Germany, however it wasn’t all bleak reading – while the unemployment rate was revised upward, more people are in employment.
Destatis released a press report which stated:
‘According to provisional calculations of the Federal Statistical Office, the seasonally adjusted number of persons in employment rose by 57,000 (+0.1%) on the previous month. Following increases of 27,000 in November 2023 and 28,000 in December 2023, the positive employment trend therefore continued at the start of the year.’
However, investors are likely awaiting the latest German inflation data, due this afternoon. If this cools as forecast, the Euro may slump later in the session.
Pound (GBP) listless amid lack of data releases
The Pound (GBP) is largely adrift this morning, owing to a continued absence of macroeconomic data.
This is preventing Sterling from finding a clear direction against its peers, with a mixed market mood further nulling its movement.
However, the Pound is likely being underpinned by hawkish comments from Bank of England (BoE) policymaker Catherine Mann. During a speech yesterday, Mann discussed UK consumer spending habits and its impact on inflation.
She stated that:
‘There is not a lot of consumer discipline on a large enough fraction of categories of services to represent active deceleration in services price inflation.’
This chimed with comments made earlier in the week by BoE Deputy Governor Dave Ramsden. Earlier, Ramsden stated his belief that inflation remained too high, and more evidence was needed before interest rate cuts were possible.
However, the lack of fresh impetus is keeping GBP sidelined today, as investors await clearer direction.
Pound Euro exchange rate forecast: EU inflation in focus
Looking ahead for the Euro, the main driver of movement is likely to be the latest inflation data for the Eurozone.
Tomorrow, February’s headline and core data is due for publication, with both figures expected to cool notably. Headline inflation is forecast to cool to 2.5% from 2.8%, while core inflation is expected to decelerate to 2.9%.
If they print in line with expectations, the common currency is likely to drop as the European Central Bank (ECB) may be able to begin cutting interest rates.
Additionally, the latest unemployment data for the bloc is due to print, reflecting January’s levels. Economists anticipate the rate to have held at 6.4%, which may dim some of the Euro’s potential losses tomorrow.
For the Pound, Bank of England (BoE) Chief Economist Huw Pill is due to speak on Friday. If he maintains his stance of a ‘table mountain’ approach to rate cuts, the Pound could strengthen.