Pound euro (GBP/EUR) ticks up following German inflation
(Updated 15:20, 29/04/24) The pound euro (GBP/EUR) exchange rate has managed to edge marginally higher moving into this afternoon’s session as a mixed German CPI reading has served to undermine the euro (EUR).
April’s preliminary year-on-year figure came in slightly below market expectations and held steady at 2.2% rather than warming to a predicted 2.3%.
Germany’s month-on-month figure did warm, from 0.4% to 0.5% for this month’s reading, however, also came in below a 0.6% expectation.
The pound (GBP) has continued to trade without a clear trajectory amid an absence of economic data and has also continued to enjoy modest support amid upbeat trading conditions thanks to its increasingly risk-sensitive nature.
At the time of writing, GBP/EUR is trading at around €1.1697, an increase of roughly 0.2% from today’s opening levels.
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Pound euro (GBP/EUR) exchange rate rangebound despite upbeat trade
The pound euro (GBP/EUR) exchange rate is trading mostly flat this morning as markets await Germany’s latest inflation data.
At the time of writing, the GBP/EUR exchange rate traded at around €1.1694, virtually unchanged from this morning’s opening rate.
Euro (EUR) wavers ahead of German CPI
The euro (EUR) is trapped in a narrow range against the majority of its peers this morning, ahead of Germany’s latest consumer price index (CPI).
As Germany is the Eurozone’s largest economy, EUR investors are likely hesitant to place any overly aggressive bets ahead of this afternoon’s release.
April’s preliminary data is forecast to report inflation accelerated from 2.2% to 2.3%.
Signs of sticky inflation may see EUR exchange rates buoyed this afternoon as it may encourage the European Central Bank (ECB) to hold off from cutting interest rates too aggressively in the second half of 2024.
Pound (GBP) mixed amid limited UK data
The pound (GBP) is trading in a wide range this morning, ticking up against some of its safer assets but faltering elsewhere, despite an absence of any key UK economic data.
Despite a lull in domestic releases, the pound is managing to firm on the back of an increase in risk appetite this morning.
However, potentially preventing any further gains for the pound this morning is ongoing Bank of England (BoE) interest rate cut speculation.
As the ‘quiet’ period has begun ahead of the central bank’s upcoming interest rate decision next week, the pound’s movements are likely to be limited until next week’s release and accompanying forward guidance.
Pound euro exchange rate forecast: Eurozone CPI in the spotlight?
Looking ahead, the primary driver of movement for the pound euro exchange rate looking past Germany’s inflation reading this afternoon is the Eurozone’s latest CPI data, scheduled for release tomorrow.
Although the Eurozone’s headline figure is forecast to remain unchanged at 2.4% for April’s reading, which may offer the single currency some modest support, core inflation is expected to cool from 2.9% to 2.6%, edging closer to the central bank’s 2% target, and could undercut any hopes of a deferred June interest rate cut.
Furthermore, tomorrow will also see the release of the Eurozone’s latest GDP figure. The quarter-on-quarter figure is expected to report a minimal increase, from 0% in 2023’s third quarter to 0.1% for the first quarter of this year.
Although the data is set to report a marginal growth level during the first three months of the year, will such a minute uptick stifle the common currency on Tuesday?
Turning to the pound, the majority of this week will see limited releases of UK macroeconomic data, which will likely see GBP exchange rates trade in line with market dynamics.
Should this morning’s increase in risk appetite prevail into the week, Sterling sentiment could be lifted thanks to its nature as an increasingly risk-sensitive currency. Equally, should markets favour more cautious trading conditions, the pound could slide.