Pound euro (GBP/EUR) exchange rate rangebound on underwhelming Eurozone data
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of the Eurozone’s latest economic sentiment index.
At the time of writing, GBP/EUR is trading at around €1.1821, virtually unchanged from this morning’s opening levels.
Euro (EUR) flat following economic sentiment
The euro (EUR) is treading water against the majority of its peers this morning despite the publication of some lacklustre domestic data.
The Eurozone’s latest economic sentiment index reported that morale declined marginally in June, with the survey falling from 96.1 to 59.9 rather than rising to 96.2 as expected.
Alongside ongoing political uncertainty in France, this has seen euro movement limited today, with the first round of France’s legislative election just days away.
This will likely see EUR exchange rates remain muted for the remainder of the day and into tomorrow, with investors likely to be reluctant to place any aggressive bets ahead of polling day.
Pound (GBP) undermined by cooling UK labour market
The pound (GBP) is struggling this morning amid concerns over the strengthen of the UK labour market.
The latest mid-year labour market update from global hiring company Indeed found that the UK job market is cooling, with new postings slowing significantly in the beauty and wellness sector.
Jack Kennedy, Senior Economist at Indeed commented:
‘The UK labour market has continued its adjustment in recent months… Tackling inactivity, a longer-term skills strategy and the role of immigration in addressing labour shortages will be agenda items for the elected government.’
Coupled with last week’s domestic inflation reading, which saw headline inflation return to the Bank of England’s (BoE) 2% target, signs of a slowing UK labour market have spurred current BoE interest rate cut bets.
Growing confidence that the BoE will begin cutting rates in August could stifle Sterling sentiment through the second half of the week.
Pound euro exchange rate forecast: UK GDP to drive movement
Looking ahead, the primary catalyst of movement for the pound euro exchange rate tomorrow will be the publication of the UK’s finalised GDP reading for the first quarter of 2024.
The data is only likely to infuse volatility into the pound if it varies from the previous estimates. A downward revision will likely undermine GBP exchange rates while an upward revision could lend Sterling some modest support.
Turning to the euro, data from Germany on Friday is forecast to report domestic unemployment held at 5.9% in June. With unemployment expected to remain close to a three-year high, this may stymie EUR support going into the weekend.
Risk appetite could also influence the GBP/EUR currency pairing at the end of this week. Should markets opt for safer assets, GBP/EUR is likely to falter and could close the week on the back foot.