Pound euro (GBP/EUR) exchange rate wobbles prior to ECB monetary update
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning after rebounding from last night’s two-week low.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1661, virtually unchanged from this morning’s opening rate.
Euro (EUR) wavers ahead of ECB monetary meeting
The euro (EUR) is mostly subdued against the majority of its rivals this morning amid a lack of notable releases in the Euro area.
Ahead of the European Central Bank’s (ECB) debate on Thursday, investors may stand reluctant in the coming days to place any aggressive bets on the euro.
As policymakers begin to position themselves for the next meeting, markets speculate whether a dovish pivot could be on the cards.
David Kohl, an analyst at Julius Baer said:
‘There are very few convincing reasons why the European Central Bank could not cut interest rates immediately, as lower inflation continues to drive real rates higher.’
With market moving data in short supply, the euro could continue to waver as markets adjust their rate cut speculations.
Pound (GBP) buoyed by upbeat retail data
The pound (GBP) is wavering this morning despite better-than-forecast retail data.
Amid a lack of more significant economic releases, GBP appears to be gaining some modest support off the back of British Retail Consortium’s (BRC) sales monitor for March. The monitor rose to 3.2%, surpassing forecasts of 1.8% and accelerating from February’s one year low of 1%.
Attributing the upturn in spending to increased Easter sales, Linda Ellett, UK Head of Consumer Markets, Leisure and Retail at KPMG, said:
‘As April signals big increases in the sector’s cost base – through the rise in minimum wage rates and business rate hikes for the larger high street brands – retailers will be hoping that the bounceback of March sales is more than just an Easter blip.’
Pound euro exchange rate forecast: ECB in spotlight
Looking ahead, thin trading conditions may see the pound euro exchange rate trade narrowly for the remainder of today’s session.
The next notable release then arrives on Thursday with the ECB’s monetary policy update, likely to be the core catalyst of movement for EUR exchange rates.
Markets expect the central bank to maintain its current base rate of 4.5%, keeping interest rates at a twenty-two year high in April’s meeting. Investors will be eager to hear any accompanying guidance from ECB policymakers, with any suggestion of a June interest rate cut likely to sink the common currency against its peers.
However, should rate-setters offer a more hawkish outlook, and push back against upcoming interest rate cuts, the euro could strengthen.
For the pound, an ongoing lack of notable UK releases may therefore see Sterling trade in a wide range ahead of the UK’s latest GDP report, due for release on Friday. The high-impact data could see GBP face fresh selling pressure, should growth surprise to the downside.
Alternatively, GBP investors will likely enjoy a return to economic expansion in the UK following a dismal period of growth last year, which could see the pound climb against its