Pound Euro (GBP/EUR) exchange rate muted prior to notable data
The Pound Euro (GBP/EUR) exchange rate is trading sideways this morning as investors likely hold off placing any aggressive bets ahead of several significant data releases later this week.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1687, virtually unchanged from this morning’s opening rate.
Pound (GBP) holds steady ahead of UK Spring Budget
The Pound (GBP) is trapped in a narrow range this morning, slightly rising against some of its more risk-sensitive peers but fading elsewhere, as GBP investors await the unveiling of the UK’s Spring Budget tomorrow.
As the UK Chancellor, Jeremy Hunt, trails investment plans ahead of his Spring Budget, predictions that he will announce a £5bn pre-election tax break for motorists, freezing fuel for a 13th consecutive year, has fueled hopes that the Budget will kick-start growth in the UK economy.
The Times reports:
‘Although not raising fuel duty in line with inflation and keeping the 5p cut will cost the Treasury £5 billion in the next fiscal year, it does not affect Hunt’s room for other tax cuts because they are deemed to be temporary — even though fuel duty has been frozen since 2011.’
With the likelihood of further tax cuts, investors await tomorrow’s highly anticipated release before placing any aggressive bets.
Keeping GBP exchange rates afloat this morning are the UK’s finalised services PMIs.
Although printing slightly below expectations, the UK services sector reported another strong expansion of growth in February, which is helping to boost hopes that the country will rebound from its recession in the first quarter of 2024..
Euro (EUR) flat ahead of ECB interest rate decision
The Euro (EUR) is treading water this morning as investors await the European Central Bank’s (ECB) latest interest rate decision on Thursday..
Although no policy changes are expected, markets will turn to the accompanying press conference for any potential forward guidance surrounding upcoming rate cuts.
Should the central bank strike a hawkish tone and push back against bets for an April rate cut, this may bolster EUR exchange rates..
Lending the common currency support this morning ahead of Thursday’s interest rate decision are the Eurozone’s finalised services PMIs.
February’s figure was revised up to 50.2 in February, from a preliminary reading of 50, marking the first expansion in the Eurozone services sector in seven months.
Pound Euro exchange rate forecast: UK Spring Budget to infuse volatility in the Pound?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate will likely be tomorrow’s Spring Budget.
Any signs that the UK Chancellor has misread markets may cause Sterling to plummet.
Turning to the Euro, prior to the ECB’s interest rate decision on Thursday, tomorrow may see EUR exchange rates rally.
With the Eurozone’s latest retail sales data expected to report that sales growth rebounded in January, along with an expected improvement in German balance of trade data for February may bolster the single currency in mid-week trade.