Pound euro (GBP/EUR) muted despite BoE interest rate decision
(Updated 15:15, 20/06/24) Moving into this afternoon’s European session, the pound euro (GBP/EUR) exchange rate is treading water following the Bank of England’s (BoE) latest interest rate decision.
However, the pound (GBP) is slipping against the remainder of its peers as the BoE enacted a widely anticipated interest rate hold accompanied by some dovish forward guidance.
This alongside yesterday’s cooling inflation data has seen BoE rate cut speculation ramp up, which has seen Sterling struggle to garner investor attention.
Andrew Bailey, the central bank’s governor, said:
‘It’s good news that inflation has returned to our 2% target. We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.’
Turning to the euro (EUR), the Eurozone’s preliminary consumer confidence index for June printed marginally below forecast which is weighing on the common currency this afternoon.
At the time of writing, GBP/EUR is trading at around €1.1821, virtually unchanged from today’s opening levels.
Original article below:
Pound euro (GBP/EUR) exchange rate flat in pre-BoE trade
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning as markets await the Bank of England’s latest interest rate decision.
At the time of writing, GBP/EUR is trading at around €1.1850, virtually unchanged from this morning’s opening rate.
Pound (GBP) flat ahead of BoE interest rate decision
The pound (GBP) is treading water against the majority of its peers this morning as UK investors await the Bank of England’s upcoming interest rate decision.
Markets anticipate that the central bank will leave interest rates on hold at a 16-year high of 5.5% when it concludes its latest meeting later this afternoon.
Following yesterday’s domestic inflation data, which saw headline inflation return to the BoE’s 2% target, signs of sticky services inflation have solidified bets that the central bank will not enact a policy change this month.
Sanjay Raja, Chief UK Economist at Deutsche Bank, commented:
‘While calls for an imminent rate cut will grow, given headline CPI’s descent to 2%, there’s likely to be growing concerns around the stickiness surrounding services inflation.’
GBP investors will instead look to the central bank’s forward guidance for impetus..
However, as the UK general election looms, the BoE is likely to keep its commentary limited which could disappoint GBP investors.
Euro (EUR) dented following disappointing German PPI
The euro (EUR) is slipping against the majority of its peers this morning following the publication of Germany’s latest producer price index.
The Federal Statistical Office, Destatis, confirmed that German PPI cooled to its lowest level in 11 months this morning.
May’s index came in at -2.2%, following a previous reading of -3.3% in April, and missed market expectations of a more modest 2.0% contraction.
Although producer prices in the Eurozone’s largest economy have been falling since July 2023, last month’s decline marked the lowest level during this period, which is weighing on EUR sentiment this morning.
Further undermining the common currency this morning is a spell of upbeat trade. As a safe-haven currency, an increase in risk-appetite is further hobbling the single currency.
Pound euro exchange rate forecast: UK retail sales to drive movement?
Looking past the BoE rate decision., the main catalyst of movement for the pound euro exchange rate at the end of this week may be the UK’s latest retail sales print.
May’s datais forecast to report sales growth rebounded from -2.3% to 1.5%. Signs of strong consumer spending could help strengthen Sterling if it weakens BoE rate cut bets.
Also scheduled for release on Friday are the UK’s and the Eurozone’s preliminary PMIs for June.
Will an uptick in both UK and Eurozone service sector growth help to underpin their respective currencies at the end of the week?