Pound euro (GBP/EUR) exchange rate flat despite decline in Eurozone industrial production
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning following the publication of the Eurozone’s latest industrial production figure.
At the time of writing, GBP/EUR is trading at around €1.1907, virtually unchanged from this morning’s opening levels.
Euro (EUR) unmoved by industrial production data
The euro (EUR) is trading sideways against the majority of its peers this morning following the release of the latest industrial production data.
Industrial output in the Eurozone contracted by 0.6% in May, better than an expected decline of 1%.
Despite the data coming above forecasts, the release still printed at a three-month low, indicating some weakness in the Eurozone manufacturing sector.
However, the report did contain some positive elements. Energy production rebounded and production of non-durable consumer goods continued to rise. With the data painting a mixed picture, it has failed to move the euro decisively in either direction.
Meanwhile, dampening EUR sentiment is France’s current pollical landscape. With the country’s recent election resulting in a hung parliament, concerns of political gridlock in the Eurozone’s second-largest economy continue to weigh on the single currency.
Pound (GBP) holds steady despite minimal data
The pound (GBP) is holding steady against the majority of its peers this morning despite an absence of notable UK data.
After hitting multi-week highs against its counterparts last week, Sterling is enjoying some modest support through to this start of this week.
The pound’s upside came following a stronger UK GDP print, recent hawkish commentary from Bank of England (BoE) officials and hope of political stability in the UK following the Labour Party’s landslide election victory.
Pound euro exchange rate forecast: UK inflation in the spotlight
Looking ahead, the pound euro exchange rate could experience some volatility later this week following the publication the UK’s latest consumer price index.
Scheduled for release on Wednesday, core inflation is forecast to cool from 3.5% to 3.4% in June, while headline inflation is expected to remain at the Bank of England’s 2% target.
Should Wednesday’s release surprise to the downside and cool more than expected, this will likely ramp up BoE rate cut bets for August and could undermine Sterling sentiment in midweek trade.
Turning to the euro, scheduled for release on Tuesday, Germany’s latest ZEW economic sentiment index is expected to show a downturn in July and print at a three-month low.
Should the data match expectations and confirm a decline in morale in the Eurozone’s largest economy, the single currency could weaken against its peers.