Pound euro (GBP/EUR) exchange rate teeters near 10-day low
The pound euro (GBP/EUR) exchange rate is struggling to find support this morning in the wake of dovish remarks from Bank of England (BoE) Andrew Bailey on Wednesday evening.
At the time of writing, GBP/EUR is trading at around €1.1680, virtually unchanged from today’s opening rate.
Pound (GBP) muted following BoE commentary
The pound (GBP) is struggling to catch bids this morning, following a recent speech by Bank of England (BoE) Governor Andrew Bailey.
Speaking in Washington yesterday evening, Bailey addressed concerns that inflation isn’t cooling as fast as previously thought.
Bailey said:
‘We are pretty much on track with where we thought we would be – a bit under in February and a bit over in the latest figures. Next month will see quite a strong drop.’
This has ramped up BoE rate cut speculation, with markets increasingly pricing in the central bank’s first rate cut to come in early summer, ultimately denting Sterling sentiment in the process.
Euro (EUR) undermined by ECB speech
The euro (EUR) capped this morning following comments from European Central Bank (ECB) Vice President Luis De Guindos.
As ECB interest rate cut bets continue to mount, the latest remarks from Guindos have bolstered speculation for a June interest rate cut.
Presenting the ECB’s Annual Report for 2023 to the Committee on Economic and Monetary Affairs of the European Parliament, Guindos said:
‘If our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction,” de Guindos said in a speech.’
The resulting bets on a June rate cut have hampered the single currency at the start of today’s session.
Pound euro exchange rate forecast: UK retail sales to lift the pound?
Looking ahead, the primary driver of movement for the pound euro exchange rate at the end of this week is likely to be the release of the UK’s latest retail sales data for March.
The month-on-month figure is expected to show a 0.3% increase in sales growth, rising from a previous reading of 0% the month prior.
Should the data match expectations and confirm a slight uptick in retail sales in March, GBP exchange rate could firm.
Turning to the euro, as significant data releases are scarce for the remainder of the week, investor attention may turn to Germany’s annual PPI data.
Should the figures reveal that producer prices continued to fall on an annual basis and fuel expectations that the cooldown inflation in the Eurozone is continuing to accelerate, this may see the common currency end the week on the back foot.