Pound euro (GBP/EUR) exchange rate flat following Eurozone data
The pound euro (GBP/EUR) exchange rate is trading at a two-week low this morning, following the release of the Germany’s latest industrial production figures.
At the time of writing, GBP/EUR is trading at around €1.1690, showing little movement from this morning’s opening levels.
Euro (EUR) holds steady following industrial production
The euro (EUR) is buoyed against the majority of its peers this morning following some better-than-expected economic data from within the Eurozone.
Germany’s latest industrial production figures reported a 0.4% contraction in March, falling from February’s 1.7% reading, however, this beat forecasts for a 0.6% decline.
Although this marked the first contraction in the sector within a three-month period, industrial production slowed less than expected in the Eurozone’s largest economy, which may be cushioning the EUR’s potential losses this morning.
Commenting on the release, ING’s Global Head of Macro Carsten Brzeski said:
‘The cyclical downswing has come to an end and optimism is back. However, the road to a substantial recovery, particularly in industry, remains long.’
Also underpinning the single currency this morning is a souring market mood, with investors erring on the side of caution amid renewed tensions in the Middle East.
Pound (GBP) flat ahead of BoE Rate Decision
The pound (GBP) is treading water this morning as an absence of market moving data sees GBP investors hold of placing any aggressive bets ahead of the Bank of England’s (BoE) upcoming interest rate decision.
The central bank is widely expected to keep interest rates on hold at 5.25% for a sixth consecutive time tomorrow, leaving GBP investors to focus on the BoE’s forward guidance for monetary policy.
As speculation mounts over when the central bank will implement its first rate cut this year, markets will be listening in for any dovish commentary from BoE officials which could indicate a rate cut sooner than expected, and in turn dent Sterling sentiment.
As data remains few and far between until the bank’s meeting, the pound’s movements are likely to be limited before tomorrow’s decision.
Pound euro exchange rate forecast: BoE rate decision to drive movement
Looking ahead, the primary catalyst of movement for the pound euro exchange rate tomorrow will undoubtedly be the Bank of England’s interest rate decision.
Should markets interpret any forward guidance from the central bank as being dovish, the pound could tumble. However, should policymakers strike a hawkish chord, Sterling sentiment could be buoyed towards the end of the week.
Turning to the euro, domestic data releases will remain scarce for the remainder of the week which could see investors cast their eye to several European Central Bank (ECB) speeches this week.
Should ECB officials continue to signal plans for a June interest rate cut, the euro could experience volatility in the second half of this week.