Pound euro (GBP/EUR) exchange rate wavers despite mixed market mood
Article updated 16:35, 30/5/2024:
The pound euro (GBP/EUR) exchange rate is remaining static this afternoon, as downbeat US data helps the euro remain afloat.
Due to EUR’s negative correlation with the US dollar (USD), news of a downward revision to the US’ latest GDP data is keeping afloat.
Furthermore, bearish trading conditions are providing additional support for the common currency. This is allowing it to remain narrow against GBP, which is remaining capped by a lack of domestic data.
However, markets are likely looking ahead to tomorrow’s Eurozone inflation data, preventing it from finding a clear direction.
At the time of writing, GBP/EUR is trading at around €1.1753, showing little movement from today’s morning rates.
Original article continues below:
Pound euro exchange rate flat amid falling EU unemployment
The pound euro exchange rate is trading in a narrow range this morning, despite upbeat EU economic data.
At the time of writing, GBP/EUR is trading at around €1.1758, showing little movement from the morning’s opening rates.
Euro (EUR) wavers despite promising economic data
The euro (EUR) is struggling for support this morning, despite a duo of upbeat economic data releases.
In April, unemployment ticked to a historic low of 6.4% across the block. This indicates that employment levels remain robust across the bloc, which may give the European Central Bank (ECB) additional room to keep interest rates unchanged.
Additionally, in May, economic sentiment across the Eurozone edged higher to 96, up from April’s reading of 95.6. However, this was beneath expectations of a 96.2 reading. Consumer and services confidence increased, due to a brightening outlook.
The European Commission’s report stated:
‘Consumer confidence also improved slightly (+0.5), mainly due to consumers’ improved outlook on the general economic situation in their respective country and, to a lesser extent, due to their slightly more optimistic intentions to make major purchases.’
However, an improving market mood is serving to cap the safer euro during today’s trade, limiting its upside.
Pound (GBP) adrift amid continued lack of data
Data releases continue to be few and far between for the pound (GBP), which is leaving it exposed to market dynamics.
Currently, risk appetite across the markets is skewing cautious, amid fears of sticky global inflation. With inflation prints across the globe coming in above expectations, investors are concerned that central banks may not cut interest rates as soon as thought.
Analysts at Mizuho Bank commented that:
‘Hotter and stickier than expected global inflation appears to be taking the air out of asset markets. In other words, ‘Goldilocks’ coming undone. And worries about adverse demand impact from higher rates seeping through.’
However, Sterling is likely remaining afloat due to delayed Bank of England (BoE) rate cut bets. The central bank is no longer expected to cut rates in June, following a cancellation of its public engagements ahead of the UK election.
Pound euro exchange rate forecast: EU inflation in focus
Looking ahead for the euro, the core catalyst of movement is likely to be the latest inflation data, due on Friday.
In May, the headline consumer price index is expected to have risen from 2.4% to 2.5%, which could strengthen the euro.
If inflation is more persistent than first thought, the European Central may need to keep interest rates level. Therefore, an increase in CPI could dent bets on a June rate cut.
Beforehand, the latest German retail sales data is due to print. In April, sales are expected to have waned by 0.1%, which could dent the euro.
For the pound, meanwhile, data releases are few and far between. This could prevent Sterling from finding a clear direction through to the end of the week.