Pound euro exchange rate holds steady following hawkish BoE comments
The pound euro (GBP/EUR) exchange rate is holding steady this morning following some slightly hawkish remarks from Bank of England (BoE) official Catherine Mann.
At the time of writing, GBP/EUR is trading at around €1.1690, virtually unchanged from this morning’s opening levels.
Pound (GBP) holds steady following BoE comments
The pound (GBP) is managing to stay above ground against the majority of its peers this morning, dipping only against its more risk-sensitive rivals, following some marginally hawkish comments from BoE rate setter Catherine Mann.
Speaking on the Economics Show podcast with Soumaya Keynes released this morning, Mann warned against being ‘seduced’ by lower domestic inflation given other underlying price pressures.
Just a day ahead of the UK’s latest jobs report, Mann commented on the UK’s labour market, explaining:
‘There were a lot of new wage agreements in April this year. There will be wage negotiations next year, which will be in relationship to the negotiations that just happened. So some people at the bottom got quite a bit of an increase, rightfully so. But the ones above them didn’t, which means next year they will, because it’s important to keep relative wages within a hierarchical structure, kind of in relationship to each other.’
As tomorrow’s wage data is expected to report a large drop in average earnings (excluding bonuses) in June, forecast to fall from a two-year low of 5.7% down to 4.5%, will this see the pound slump?
Euro (EUR) undermined by risk-on flows
The euro (EUR) is struggling to garner investor attention this morning, and is trading mostly flat against the majority of its peers, as a lack of Eurozone data releases sees the common currency struggle to find a clear trajectory.
Further undermining the euro this morning is a bout of upbeat trade. Following significant market volatility last week, markets are opting for riskier assets at the start of this week’s trading session.
As such, the safe-haven currency is struggling to catch bids and remains mostly rangebound against its peers.
Pound euro exchange rate forecast: duo of impactful data to drive GBP/EUR?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate tomorrow will likely be the publication of both the UK’s latest jobs data alongside Germany’s latest ZEW economic sentiment index.
Up first, UK unemployment is forecast to rise from 4.4% to 4.5% in June.
Should tomorrow’s data confirm UK unemployment has risen above May’s three-year high, alongside an expected downturn in domestic wage growth, Sterling could experience fresh selling pressures at the start of tomorrow’s trading session.
Turning to the euro, the latest German ZEW economic sentiment index is expected to report another fall in morale in the Eurozone’s largest economy, with the index forecast to drop from 41.8 to 38 in August.
Should the data print as expected and confirm another decline in economic sentiment, the Euro could falter against its peers.