Pound euro (GBP/EUR) dented by UK data
(Updated 16:45, 25/07/24) The pound euro (GBP/EUR) exchange rate edged lower moving into the second half of today’s European session following an underwhelming batch of UK data from the Confederation of British Industry (CBI).
The latest industrial trends orders came in well below forecast in July, printing at -32 rather than a more modest -19 expectation. The latest business optimism index also printed below expectations, coming in at -9 rather than rising to 15, ultimately hobbling the pound (GBP).
The euro (EUR) remained on the defensive for the remainder of today’s session following Germany’s IFO business climate index falling for a third consecutive month.
At the time of writing, GBP/EUR is trading at around $1.1861, down roughly 0.3% from today’s opening levels.
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Pound euro (GBP/EUR) exchange rate dented by lacklustre German data
The pound euro (GBP/EUR) exchange rate is on the back foot this morning following the publication of Germany’s latest IFO business climate index.
At the time of writing, GBP/EUR is trading at around €1.1882, down roughly 0.2% from this morning’s opening levels.
Euro (EUR) undermined by German business pessimism
The euro (EUR) is struggling to garner investor attention this morning following the publication of Germany’s IFO business climate index.
The IFO institute confirmed that the index declined for a third consecutive time in July, falling from 88.6 to 87 rather than rising to 88.9 as expected.
This was the lowest print since February, ultimately hobbling the common currency in the wake of the release.
Ifo president Clemens Fuest commented: ‘The German economy is stuck in the crisis.’
Signs of fading business optimism in the Eurozone’s largest economy have also ramped up European Central Bank (ECB) interest rate cut bets, further undermining the euro this morning.
Pound (GBP) quiet amid absence of data
The pound (GBP) is treading water against the majority of its peers this morning as a lack of domestic data sees Sterling struggle to find a clear direction.
This leaves Sterling vulnerable to shifts in Bank of England (BoE) interest rate cut bets, just a week away from the central bank’s upcoming interest rate meeting.
A recent poll by Reuters showed that over 80% of economists interviewed last week expect to see the BoE lower its base rate to 5% next week, after keeping rates at 16-year highs of 5.25%.
Allan Monks, economist at J.P. Morgan, said:
‘We look for a 25 basis point rate cut at next week’s meeting, although the call appears much closer than it did several weeks back. The case for lower rates is far from clear. If rates are lowered in August, it looks likely to happen on a close 5-4 vote.’
With a recent slew of upbeat economic data, will this be enough for the central bank to keep rates unchanged? Or will a 25 basis point rate cut next week undermine GBP?
Pound euro exchange rate forecast: mid-tier data to drive movement?
Looking ahead, amid an absence of high impact data, the GBP/EUR exchange rate could be driven by some mid-tier UK data, scheduled for release later this morning.
The Confederation of British Industry’s (CBI) business optimism index is forecast to report another rise in the outlook of UK businesses, which could buoy GBP exchange rates should the data reflect overall domestic confidence.
Turning to the euro, Friday will see the publication of the Eurozone’s latest consumer inflation expectations for June.
Should the latest index show that consumer inflation expectations continue to fall in the Eurozone, this could further ramp up ECB rate cut bets and undermine the single currency at the end of the week.