Pound euro exchange rate ticks up amid improvement in risk appetite
The pound euro (GBP/EUR) exchange rate is edging higher this morning following the publication of Germany’s latest GFK consumer confidence index.
At the time of writing, GBP/EUR is trading at around €1.1985, up roughly 0.2% from this morning’s opening levels.
Euro (EUR) on the defensive despite positive German data
The euro (EUR) is facing fresh headwinds against the majority of its peers this morning despite the publication of some better-than-expected economic data from within the Eurozone’s largest economy.
Germany’s latest GFK consumer confidence index reported a slight increase for the month ahead, rising from -21.9 to 21.2, ahead of a more modest 21.5 expectation.
However, the data had little positive impact on the single currency, as the marginal uptick has been seen as more of a ‘a stabilization at a low level’, which has undermined the common currency instead.
Nuremberg Institute for Market Decisions (NIM) Consumer Expert Rolf Buerkl commented:
‘After the severe setback in the previous month, the slight improvement in consumer climate can be interpreted more as a stabilization at a low level. The consumer climate has not improved since June 2024, when it hit -21 points. Therefore, the slight increase cannot be interpreted as the beginning of a noticeable recovery. The consumer sentiment is generally too unstable for that.’
Further souring EUR sentiment this morning is a return to upbeat trade, which has seen investors once again shun safe-haven currencies such as the euro in favour of their riskier rivals.
Pound (GBP) buoyed by cheery trade
The pound (GBP) is managing to firm against its safer assets this morning as a return to positive trading conditions sees GBP catch bids on the back of its increasingly risk-sensitive nature.
However, capping any further Sterling gains this morning is the publication of the UK’s latest consumer sentiment index from the British Retail Consortium.
The latest index sank from a previous reading of -8 to -21 this morning, with the downturn driven by hints of a ‘worrying’ upcoming Autumn Budget.
This has seen the pound fail to drift any higher against its safe-haven rivals, and remain muted against its other risk-sensitive peers.
Pound euro exchange rate forecast: Eurozone data in the Spotlight
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking at tomorrow will likely be the publication of the Eurozone’s latest economic sentient index for September alongside this month’s finalised consumer confidence index.
Economic sentiment is expected to dip this month, forecast to fall from 96.6 to 96.5. Should the data print as expected and confirm deterioration in the bloc’s overall economic sentiment, this could weigh on the common currency in the wake of the release.
However, potentially capping some of the euro’s losses tomorrow could be the publication of the latest consumer confidence index, which is forecast to rise from -13.5 to -12.9.
Turning to the pound, UK data will be largely absent from tomorrow’s data-calendar, and as such, will likely see GBP exchange rates trade without a clear trajectory moving into the end of the week.