Pound euro (GBP/EUR) exchange rate holds steady following Eurozone CPI
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the latest set of inflation data from the Eurozone.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1676, virtually unchanged from this morning’s opening rate.
Euro (EUR) flat despite cooling inflation
The euro (EUR) is trading sideways this morning after the Eurozone published its latest headline and core inflation figures.
Both sets of data printed below market expectations and cooled for a third consecutive month.
Headline inflation cooled from 2.6% to 2.4% rather than remaining unchanged as predicted, meanwhile core inflation cooled from 3.1% to 2.9%, slightly below forecasts for a more modest fall to 3%.
The slowdown in consumer price growth has been put down to a smaller increase in food and goods prices, which was offset by strong services prices.
As inflation in the Eurozone is making its way down to the European Central Bank’s (ECB) 2% target, speculation over upcoming interest rates cuts could deter EUR investors in the aftermath of the release.
Pound (GBP) subdued amid lack of data
The pound (GBP) is treading water this morning as an absence of economic data releases has left Sterling struggling to find a clear direction.
Amid an absence of data, GBP investors may be reluctant to place any overly aggressive bets in the midst of ongoing Bank of England (BoE) interest rate cut speculation.
In recent weeks, BoE governor Andrew Bailey has implied that the UK could be moving towards a rate cut, ramping up expectations that the central bank will begin loosening its monetary policy in June, rather than later in the summer, ultimately denting Sterling sentiment.
Pound euro exchange rate forecast: ECB minutes to infuse volatility into the euro?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate tomorrow is likely to be the ECB’s latest monetary policy meeting minutes.
EUR investors will look to the central bank’s meeting minutes for further guidance on when a potential interest rate cut could occur.
With markets pricing in a primary rate cut in June, any further dovish hints from ECB officials in the wake of the release could increase rate cut speculation, and in turn undermine the common currency.
Turning to the Pound, the UK’s final S&P global services PMI is expected to remain in growth territory in March.
Should the data match expectations and confirm another strong figure for March’s reading, this could offer the pound some support.
Looking ahead of tomorrow, a lack of UK data releases may leave Sterling vulnerable to the ever-shifting market mood, and could see GBP exchange rates dip if markets remain risk averse.