Pound euro exchange rate muted following German economic releases
The pound euro (GBP/EUR) exchange rate is trapped in a narrow range this morning despite the publication of a couple of underwhelming data releases from Germany.
At the time of writing, GBP/EUR is trading at around €1.1830, virtually unchanged from this morning’s opening levels.
Euro (EUR) undermined by domestic data
The euro (EUR) is subdued this morning following the publication of Germany’s finalised GDP reading for the second quarter of the year, alongside Germany’s latest GFK consumer confidence index.
The quarterly figure confirmed that GDP shrank by 0.1% in Q2, following a 0.2% increase during this year’s first quarter.
The lacklustre reading, although expected, has re-ignited fears over the overall health of the Eurozone’s largest economy, which has seen EUR exchange rates remain largely muted in the wake of the release.
Further weighing on the single currency this morning is the publication of the latest GFK consumer confidence index, which printed lower than expected for September.
The index fell from a previous reading of -18.6 to -22.0 rather than marginally rising to -18.0 as expected.
Carsten Brzeski, Global Head of Macro at ING, commented following the releases, and said:
‘With disappointing second-quarter growth and almost all confidence sentiment indicators pointing south, the German economy is currently back where it was a year ago: stuck in stagnation as the growth laggard of the entire eurozone.’
Pound (GBP) quiet ahead of mid-tier data
The pound (GBP) is trending mostly flat against the majority of its peers this morning as investors await some mid-tier economic data scheduled for release later this morning.
The latest Confederation of British Industry (CBI) distributive trades index is forecast to show a slight uptick in this month’s reading, which could offer GBP exchange rates some modest support in the latter stages of the morning’s European session.
However, as the index is forecast to remain in negative territory, will the survey act as a headwind and undermine Sterling sentiment instead?
Pound euro exchange rate forecast: Eurozone inflation to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate this will likely be the publication of the Eurozone’s preliminary consumer price index (CPI) for August.
As the latest headline inflation rate is forecast to cool from 2.6% to 2.2%, expected to move closer to the European Central Bank’s (ECB) 2% target, this could ramp up ECB interest rate cut bets further and undermine the single currency in the process.
Turning to the pound, UK data releases will remain scarce for the majority of the week, which could see GBP exchange rates trade in line with risk dynamics.
Should upbeat trade prevail this week, Sterling could be lifted on the back of its nature as an increasingly risk-sensitive currency.