Pound euro (GBP/EUR) exchange rate muted ahead of Eurozone data
The pound euro (GBP/EUR) exchange rate is trading sideways amid a lack of economic data from both the UK and the Eurozone this morning.
At the time of writing, GBP/EUR is trading at around €1.1880, virtually unchanged from this morning’s opening levels.
Euro (EUR) rangebound ahead of consumer confidence
The euro (EUR) is treading water against the majority of its peers this morning as EUR investors appear reluctant to place any aggressive bets ahead of the latest economic data release from the Eurozone.
Scheduled for release this afternoon, the Eurozone’s preliminary consumer confidence index is forecast to marginally rise, which could offer the single currency some modest support should the index confirm an improvement in consumer morale.
Elsewhere, risk-off flows are failing to bolster the Euro ahead of the release, despite its status as a safe-haven currency.
Pound (GBP) undermined by rise in rate cut bets
The pound (GBP) is struggling to garner investor attention this morning as market moving data remains scarce, thus leaving Sterling largely directionless.
However, further undermining GBP exchange rates this morning is an increase in Bank of England (BoE) interest rate cut bets.
With just over a week to go before the central bank’s upcoming interest rate decision, the market odds of an August rate cut have increased from 40% to 50% following a slew of mixed economic data.
Although May’s inflation data came in higher than expected, alongside last month’s stubborn wage growth data, the UK’s latest retail sales revealed a much larger than expected contraction.
Novo Constare, CEO and co-founder of Indeed Flex, commented:
‘A rate cut is a possibility next month but could still be premature while wage growth remains strong and prices in the UK’s dominant services sector continue to rise. However, there is optimism that interest rates will eventually fall from their 16-year high this year, providing a much-needed boost to businesses and enhancing job creation.’
The uncertainty surrounding the future of monetary policy next week has seen GBP exchange rates remain listless during the first half of today’s European session.
Pound euro exchange rate forecast: PMIs in the spotlight
Looking ahead, the likely driver of movement for the pound euro exchange rate tomorrow will be the publication of both the UK’s and the Eurozone’s preliminary PMI data.
Looking at the Pound, the UK’s key services sector is expected to report that services continued to grow this month, which could underpin GBP exchange rates should the data match expectations.
Turning to the Eurozone, the latest PMIs are expected to report a mixed reading, with the services sector forecast to expand while the manufacturing index is forecast to remain in contraction territory (a reading below 50). Will this see EUR exchange rates waver?
Also scheduled for release tomorrow is Germany’s latest GFK consumer confidence index. Will an expected uptick in consumer confidence in the Eurozone’s largest economy boost the common currency?