Pound Euro (GBP/EUR) exchange rate rangebound amid mixed Eurozone releases
The Pound Euro (GBP/EUR) exchange rate is wavering this morning, amid mixed Eurozone economic data.
At the time of writing, GBP/EUR is trading at around €1.1685, showing little movement from the morning’s opening levels.
Euro (EUR) muted amid mixed data
The Euro (EUR) is trading in a muted capacity this morning, following mixed economic data.
Confirmation of cooling inflation is likely pressuring the Euro as it reaffirms previous calls from European Central Bank (ECB) policymakers. As headline inflation continues to cool closer to the ECB’s 2% target, the likelihood of interest rate cuts increases.
Yesterday, ECB Governing Council member Pablo Hernandez de Cos stated that:
‘The announcement last week that we have completed our goal of getting inflation to 2% is compatible with a cut in interest rates soon, and that could probably happen in June.’
While an April starting point has been discussed, the rate cuts before Summer appear to be increasingly likely.
Additionally, The Eurozone’s latest trade data printed below forecasts for January, while inflation was confirmed to have cooled notably.
On a monthly basis, the bloc’s trade surplus shrank to €11.4 billion, down from a surplus of €16.8 billion in December. This may be weighing on the Euro as it could suggest cooling trade between the Euro area and its partners.
Pound (GBP) listless amid light data calendar
With data releases largely absent this morning, the Pound (GBP) is enduring rangebound trade against most peers.
Although bullish trade is keeping Sterling afloat, investors are likely hesitant to show emphatic support. The Bank of England (BoE) are due to unveil their latest interest rate decision later this week, with the key rate likely to be unchanged.
This is pushing the BoE’s forward guidance to the forefront of investor’s attention, specifically the timing of rate cuts.
The BoE is expected to be the last central bank to cut rates, which has served to keep GBP underpinned against its peers. If the BoE remains mute on specific timings, Sterling could gain ground later this week.
Pound Euro exchange rate forecast: Cooling UK inflation to dent Pound?
Looking ahead for the Pound, the core catalyst of movement is likely to be the latest UK inflation data, due on Wednesday.
In February, both core and headline inflation are forecast to have cooled notably, which could weaken Sterling. Decelerating inflation is likely to prompt investors to consider when the Bank of England will begin cutting interest rates, which may further soften the Pound.
For the Euro, meanwhile, the latest German ZEW economic sentiment index is due to print. The reading is forecast to have increased in March, which could strengthen EUR as the German economy’s outlook shows signs of brightening.
This is followed on Wednesday by a speech from European Central Bank President Christine Lagarde. If President Lagarde maintains the ECB’s dovish outlook, the common currency may weaken.