Pound euro (GBP/EUR) exchange rate wavers amid absence of domestic data
The pound euro (GBP/EUR) exchange rate is wavering this morning, owing to a lack of notable data on both sides.
At the time of writing GBP/EUR is trading at around €1.1832, showing little movement from today’s morning rates.
Pound (GBP) flat amid absence of impactful releases
The pound (GBP) is rangebound today owing to a lack of impactful domestic data releases. This may be prompting investors to keep a focus on the upcoming UK elections.
Currently, the Bank of England (BoE) is on a blackout period ahead of July 4. This could mean that the lack of forward guidance in any capacity may keep Sterling muted in the coming days.
While the timing of the BoE’s first interest rate cut is likely to be August, future policy loosening remains under question. If markets begin to price in multiple cuts from the BoE, it could weaken the pound in the short term.
In terms of the election, this is likely keeping GBP steady this morning as it seems as if Labour will win a notable majority. Due to the party’s commitment to fiscal orthodoxy and its backing by UK businesses, a victory could underpin Sterling.
Euro (EUR) muted amid lack of data
The euro (EUR) is wavering this morning, as an absence of macroeconomic data leaves investors to focus on domestic issues.
In France, the far-right National Rally party may have contributed to some support for the common currency. Yesterday, the party committed to obeying the country’s fiscal rules for budgeting.
However, as the campaign is still in its early days, it may be too soon for any party to make significant concessions to their manifestos. Additionally, predictions have surfaced that the leftist New Popular Front could perform above expectations.
In contrast, the New Popular Front have stated that they plan to increase public spending to fund its economic reforms.
It looks as if the centre cannot hold in France in the wake of its elections, which may engender further turbulence for EUR. Fiscal policy may struggle to find a clear focus as the government may become divided across the political spectrum.
Elsewhere, a mixed market mood could be further undermining the euro. As a safer currency, the unclear tone could be preventing it from finding direction.
Pound euro exchange rate forecast: CBI retail data in focus
Looking ahead for the pound, the core catalyst of movement is likely to be the latest distributive trades data from the Confederation of British Industry (CBI).
The CBI is expected to have found that retail sales softened in June, with the index falling from a reading of 8 in May to 5. This could weaken the pound by suggesting that recent improved spending was a short-lived increase amid fading sales.
However, the data could surprise to the upside. If this occurs, Sterling could strengthen amid signs of easing spending pressures.
For the euro, the primary focus for investors may be the latest GfK consumer confidence data for July. On a monthly basis, sentiment is expected to have improved somewhat, but remain deeply negative which could weaken the common currency.
This is followed by a speech from European Central Bank (ECB) Chief Economist Philip Lane. If he maintains the ECB’s coy tone around future interest rate cuts, the euro may gain ground.