Pound euro (GBP/EUR) exchange rate wavers amid data lull
The pound euro (GBP/EUR) exchange rate is listless this morning with fresh data in short supply.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1829, virtually unchanged from this morning’s opening rate.
Euro (EUR) buoyed by deferred rate cuts bets
The euro (EUR) is largely rangebound this morning amid a lack of fresh releases in the Eurozone.
With macroeconomic releases in short supply, dialled back expectations of European Central Bank (ECB) monetary loosening serve to keep the common currency afloat.
Dr. Alexander Glas, Project Leader of the ZEW Financial Market Survey, commented:
‘Most respondents expect the ECB to cut rates in September and December 2024. However, they do not foresee a linear downward movement of interest rates but rather phases during which the ECB Governing Council will keep rates at the level of previous meetings, in line with ECB President Christine Lagarde’s statements on a future data-driven approach to monetary policy adjustments.’
Elsewhere, French political jitters continue to prevent EUR from edging higher against its rivals. France’s latest election resulted in a hung parliament, and while Marine Le Pen’s far-right National Rally (RN) failed to take the lead, concerns of a political deadlock in the Eurozone’s second-largest economy may continue to leave EUR on the defensive.
Pound (GBP) wavers amid data lull
Amid fading election tailwinds in the UK, investor focus returns to Bank of England (BoE) monetary policy amid a lack of domestic releases, leaving the pound (GBP) largely subdued this morning.
So far, the central bank has maintained a cautious stance towards monetary loosening, reflecting policymakers need for more certainty that underlying inflationary pressures have substantially subsided.
Additionally, Jonathan Haskel, a member of the bank’s Monetary Policy Committee (MPC) noted earlier in the week that monetary unwinding should be avoided until the central bank sees clear evidence of sustainable disifnaltion across the UK.
Haskel noted:
‘The labour market continues to be tight, and I worry it is still impaired,” he wrote in a speech due to be delivered later on Monday.
I would rather hold rates until there is more certainty that underlying inflationary pressures have subsided sustainably.’
Pound euro exchange rate forecast: BoE speech in focus
Later this afternoon, BoE Chief Economist Huw Pill is due to speak. Huw is expected to assess Britain’s inflation outlook, as the UK’s vital consumer price index (CPI) nears the central bank’s 2% target rate. Should Pill indicate a preference for monetary easing, GBP may further weaken against its rivals. Alternatively, any hawkish rhetoric may buoy GBP.
Looking to the Eurozone, the latest German inflation data is due for release tomorrow. Confirmation of sticky inflation in the Eurozone’s largest economy could see EUR strengthen.