Pound euro (GBP/EUR) exchange rate muted amid lack of data
The pound euro (GBP/EUR) exchange rate languishes at a three-month low this morning, amid then absence of any notable economic data.
At the time of writing, GBP/EUR traded at around €1.1601, virtually unchanged from this morning’s opening rate.
Euro (EUR) undermined by cautiously optimistic market mood
The euro (EUR) is trading on the back foot against the majority of its peers this morning as a risk-on mood undermines demand for the safe-haven single currency.
The slight uptick in risk appetite has come following an ‘easing’ in geopolitical tensions, specifically in the Middle East.
Susannah Streeter,Head of Money and Markets at Hargreaves Lansdown, explains:
’The FTSE 100 has spring in its step at the start of the week, amid an easing of geopolitical tensions. The pulse of positivity comes in the absence of fresh retaliatory attacks by Israel or Iran and the US flexing its funding muscle and passing a crucial aid package for Ukraine.’
The euro could experience some volatility later this afternoon as European Central Bank (ECB) President Christine Lagarde is due to speak.
Amid ongoing speculation that the ECB will begin unwinding its tightening policy as early as June, should Lagarde once again signal that this could be the case, the single currency could weaken.
Pound (GBP) wavers following dovish BoE comments
The pound (GBP) is fluctuating this morning, rangebound against the majority of its peers but faltering against its more risk sensitive counterparts, amid lull in significant UK data releases.
As such, Sterling is holding near the low’s struck on Friday in the wake of dovish Bank of England (BoE) comments.
Speaking in Washington DC on Friday afternoon, BoE Deputy Governor Dave Ramsden suggested that UK inflation is likely to fall close to the bank’s 2% target in April.
Ramsden said:
‘Given we know the level of the Ofgem price cap for April and also taking account of the freezing of fuel duties in the March Budget, then other things equal we can be confident headline CPI inflation will fall sharply in April, to close to the 2% target.’
This fueled BoE interest rate cut speculation, promoting markets to decrease their bets from August to June, thereby denting the pound.
This has served to undermine Sterling sentiment through to this morning’s European session amid a lack of more significant macroeconomic data.
Pound euro exchange rate forecast: PMIs to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate this week is likely to be the release of both the UK’s and Eurozone’s preliminary PMI data, scheduled for release on Tuesday.
UK services PMI for March is expected to report another strong figure, forecast to print at 53, well above the 50 level that marks expansion and may bolster GBP exchange rates in mid-week trade.
Turning to the euro, will an expected services reading of 51.8 be enough to deter investors from their June rate cut bets?
Furthermore, a series of BoE and ECB speeches could rock the GBP/EUR exchange rate this week should policymakers from either side of the North Sea signal at any upcoming interest rate cuts.