Pound Euro (GBP/EUR) exchange rate flat ahead of ECB Lane speech
The Pound Euro (GBP/EUR) exchange rate is rangebound this morning, as markets await a speech from European Central Bank (ECB) Chief Economist Philip Lane.
At the time of writing, GBP/EUR is trading at around €1.1710, showing little movement from the morning’s opening rates.
Euro (EUR) wobbles ahead of ECB Lane speech
The Euro (EUR) is wavering this morning, as markets look ahead to a speech from European Central Bank Chief Economist Philip Lane.
Recent communication from the ECB has skewed broadly dovish, with some policymakers explicitly calling for an April interest rate cut.
Furthermore, comments today from ECB policymaker Olli Rehn are further undermining the Euro. In a speech, Rehn stated:
‘If inflation continues to fall and, according to our estimation, sustainably downwards towards the target, we can close to the summer already slowly start easing our foot off the brake pedal of monetary policy.’
Because of this, investors are continuing to bet on an imminent beginning to the ECB’s rate cutting cycle.
Elsewhere, a shifting market mood is keeping the Euro in flux. While the session began on a bearish note, trading conditions have begun to brighten, dampening the safer common currency.
Pound (GBP) rangebound amid lack of data
The Pound (GBP) is trading in a muted capacity this morning, due to a continued lack of impactful macroeconomic data.
This is serving to keep the focus on the Bank of England’s (BoE) likely next steps, as markets eye next week’s interest rate decision.
August is being considered as a likely starting point for the BoE to begin cutting rates. Inflationary pressures in the UK are more persistent and elevated than they are elsewhere, leading to a discrepancy between central banks.
This is serving to keep Sterling underpinned against its peers, despite the lack of additional movement catalysts.
Elsewhere, a mixed market mood is likely keeping Sterling on its toes this morning. While the mood has begun to shift in favour of risk-sensitive assets, GBP appears unable to press its advantage.
Pound Euro exchange rate forecast: German economic sentiment in focus
Looking ahead for the Euro, next Tuesday brings the release of the latest German ZEW economic sentiment index.
Economists are forecasting the figure to have increased in March, rising from 19.9 to 20.5. While likely to remain deeply pessimistic, the improvement could cushion the Euro as Germany continues to attempt a recovery.
However, if the accompanying analysis paints a bleak portrait of the Eurozone’s largest economy, EUR may struggle to gain ground.
The common currency could see movement on Monday following the release of the latest Eurozone trade data. If the bloc’s trade surplus increased as forecast in January, EUR may strengthen.
For the Pound, meanwhile, data releases are few and far between which is likely to leave GBP to trade listlessly.
However, as an increasingly risk sensitive currency, a shift towards bullish trade could support Sterling against EUR.