Pound euro exchange rate retreats from two-week low, supported by further BoE commentary
The pound euro (GBP/EUR) exchange rate has managed to recoup the majority of its losses from yesterday’s European session as the currency pairing is being bolstered by comments from the Bank of England’s (BoE) Chief Economist Huw Pill.
At the time of writing, GBP/EUR is trading at around €1.1935, up roughly 0.3% from this morning’s opening levels.
Pound (GBP) underpinned by BoE comments
The pound (GBP) has managed to regain ground against the majority of its peers this morning following yesterday’s GBP sell-off in the wake of some dovish commentary from the Bank of England’s Governor Andrew Bailey.
Bailey commented on the future path of UK interest rate cuts, and said the central bank may need to take a more ‘aggressive approach’ to future cuts.
This saw GBP slump over 1% against several of its counterparts, however, comments from the central bank’s chief economist this morning have seen Sterling rally.
Huw Pill warned of cutting internet rates ‘too fast or too much’ this morning, which has seen the Pound jump up since the publication.
Pill explained:
‘While further cuts in Bank Rate remain in prospect should the economic and inflation outlook evolve broadly as expected, it will be important to guard against the risk of cutting rates either too far or too fast.
For me, the need for such caution points to a gradual withdrawal of monetary policy restriction.’
Euro (EUR) flat amid lack of data
The euro (EUR) is struggling to garner investor attention this morning as a lack of fresh economic data releases from within the Eurozone sees the single currency struggling to find a clear trajectory.
EUR investors may also be reluctant to place any aggressive bets ahead of an upcoming speech from European Central Bank (ECB) official Luis de Guindos, scheduled for release later this morning.
Amid increasingly shifting ECB rate cut bets, should Guindos hint at an upcoming rate cut or deliver any dovish commentary surrounding the future of monetary policy, EUR exchange rates will likely close the week dipping on the back of rising ECB rate cut bets.
Pound euro exchange rate forecast: Eurozone data to drive movement?
Looking ahead, the primary catalyst of movement for the pound euro exchange rate looking ahead to next week will likely be the publication of the Eurozone’s latest retail sales data, scheduled for release on Monday.
In July, retail sales in the bloc grew by 0.1%. Should August’s data confirm another minute increase, or report a downturn in consumer spending, the single currency could begin the week struggling to catch bids.
Turning to the pound, UK data will be absent from Monday’s data-calendar, and as such, will likely leave GBP largely directionless at the start of next weeks trading session.