Pound euro (GBP/EUR) exchange rate wavers amid data-light session
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) wavers amid data lull
The euro (EUR) is largely rangebound this morning amid a lack of notable macroeconomic releases from within the Eurozone.
With data in short supply, the timing of the next of European Central Bank (ECB) interest rate cut is called into question once again. Having been one of the first major central banks to begin loosening its monetary policy this year, signs of further disinflation across the Eurozone have fuelled market expectations that the ECB could deliver another rate cut in September.
Analysts at ING said:
‘It is clear that the July meeting will probably be a non-event without any new rate action or rate guidance. In fact, we expect the ECB to cut rates again at the September and December meetings – at least as long as the ECB itself continues to see inflation at 2% and below from the end of 2025 onwards.’
Elsewhere, as the US dollar (USD) continues to stumble in the wake of a cooling US consumer price index, the common currency hold steady, due to its negative correlation with a weakened ‘greenback’.
Pound (GBP) fluctuates amid lack of data
The pound (GBP) is holding steady against its peers this morning amid a data-light session in the UK.
After touching a fresh yearly-high yesterday, fading UK growth tailwinds appear to keep GBP afloat so far today.
However, much like its EUR counterpart, increased speculation that the Bank of England (BoE) could begin to loosen in the near future could prevent any notable GBP movement throughout today’s session. Major economists reiterate expectations of an August rate cut, pricing in a total of three rate cuts this year, which is one more than markets are currently anticipating.
Economists at ING say:
‘We’ve long expected the Bank of England’s first rate cut in August, and that looks like it is on track.
In fact, although seven out of the nine-strong committee voted to keep rates on hold last month, the meeting minutes revealed that some of them thought the decision was “finely balanced”. That’s central bank speak for saying a rate cut is imminent.’
However, as yesterday’s stronger-than-expected growth data and a hawkish BoE outlook have since reduced the likelihood of an August rate cut from 70% down to approximately 50%, could GBP extend its recent wins as the session progresses?
Pound euro exchange rate forecast: risk appetite to drive movement?
Looking ahead, a lack of immediate releases for both the UK and the Eurozone could see the pound euro exchange rate trading in a wide range. Global risk dynamics ma therefore play a major role in any movement within the pairing, with upbeat trade likely to boost the increasingly risk-sensitive pound. Alternatively, a move towards cautious trading conditions could see the safe-haven euro take precedent.