Pound euro exchange rate pressured by upbeat EUR data
(Updated 15:15, 30/4/24) The pound euro (GBP/EUR) exchange rate remains on the defensive this afternoon, in the wake of this morning’s Eurozone data.
Stronger-than-expected Eurozone GDP and core inflation figures continue to underpin the single currency as it helps to temper European Central Bank (ECB) interest rate cut expectations.
However, the euro’s gains remain fairly limited in scope as analysts remain confident that a June rate cut is on the cards.
Meanwhile, a broadly risk-off market mood ensures demand for the pound remains weak.
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Pound euro exchange rate dented by impressive Eurozone data
The pound euro (GBP/EUR) exchange rate is on the back foot this morning, in the wake of the Eurozone’s latest GDP and inflation figures.
At the time of writing the pound euro exchange rate is trading at around €1.1693. Down roughly 0.3% from this morning’s opening rate.
Euro (EUR) bolstered by robust data
The euro (EUR) is on the front foot this morning, following the publication of some high-impact Eurozone data.
Perhaps providing the largest boost to EUR exchange rates this morning is the Eurozone’s latest GDP figures.
According to data published by Eurostat, growth in the bloc’s economy accelerated from 0% to 0.3% in the first quarter of 2024. Beating forecasts for a more modest 0.1% expansion.
This uptick was driven by stronger-than-expected growth in several Eurozone countries. EUR investors were particularly relieved by an acceleration in Germany, which saw the bloc’s largest economy avoid falling into a recession.
The GDP figures were accompanied by the release of the Eurozone’s latest consumer price index.
April’s preliminary CPI figures reported that headline inflation held at 2.4%, while core inflation cooled from 2.9% to 2.7% against forecasts it would drop as low as 2.6%.
The data is helping to lift the euro this morning. Taken together, the stronger-than-expected growth and sticky inflation figures appear to be dampening bets for several European Central Bank (ECB) interest rate cuts through the second half of 2024.
Pound (GBP) dented by risk-off flows
The pound (GBP) is struggling to attract support this morning as the increasingly risk-sensitive currency is undermined by a cautious market mood.
Market risk appetite has diminished since the start of Tuesday’s trading session amid uncertainty over a potential ceasefire agreement between Israel and Gaza.
Further limiting risk sentiment this morning is a sense of caution ahead of the Federal Reserve’s interest rate decision on Wednesday.
Analysts expect the Fed to signal that US interest rates will remain on higher for longer in light of recent US inflation and jobs data.
Economist fear that high US interest rates may limit global growth in the second half of the year.
Pound euro exchange rate forecast: contraction in UK manufacturing PMI to drag on Sterling?
Looking ahead, the pound euro exchange rate may face resistance on Wednesday as the UK publishes its latest manufacturing PMI.
The finalised figures are expected to confirm that the growth in the UK factory sector contracted in April.
Could signs of slowing UK economic activity place more pressure on the Bank of England (BoE) to start cutting interest rates?
Meanwhile, markets across the Eurozone will be closed for May Day on Wednesday. This is likely to result in thin-trading conditions for the euro, leaving it vulnerable to losses.