Pound euro exchange rate weakens following UK CPI data
The pound euro (GBP/EUR) exchange rate is losing ground this morning following the publication of the UK’s latest consumer price index (CPI).
At the time of writing, GBP/EUR is trading at around €1.1944, down roughly 0.5% from this morning’s opening levels.
Pound (GBP) slips following UK inflation
The pound (GBP) has slumped against almost all of its peers this morning as the UK published its latest consumer price index.
September’s index saw UK inflation print below market expectations this morning, with both headline and core inflation cooling more than expected.
Core inflation fell from 3.6% to 3.2% rather than a more modest 3.4% expectation while headline inflation dropped from 2.2% to 1.7% rather than a 1.9% expectation, falling below the Bank of England’s (BoE) 2% target for the first time in three years.
As price pressures continue to ease, BoE rate cut bets have jumped up in the wake of the release, which has severely undermined GBP sentiment.
Lindsay James, Investment Strategist at Quilter Investors commented:
‘For the first time in more than three years inflation is back below the Bank of England’s 2% target. With inflation falling below this level and the pace of wage growth slowing, the conditions appear ripe for another rate cut at the Bank of England’s next decision in early November, and maybe even the one after in December too.’
Euro (EUR) flat ahead of ECB speech
The euro (EUR) is struggling to garner investor attention this morning as a lack of economic data from within the Eurozone sees the single currency struggling to find a clear trajectory.
EUR investors may also be reluctant to place aggressive bets ahead of an upcoming speech this evening from European Central Bank (ECB) President Christine Lagarde.
As the ECB’s latest interest rate decision is just one day away, markets will look to this evening’s speech for any hints surrounding tomorrow’s upcoming rate decision.
Should Lagarde hint at a reduction at tomorrow’s meeting, EUR exchange rates will likely dip.
Pound euro exchange rate forecast: ECB interest rate decision in the spotlight
Looking ahead, the primary catalyst of movement for the pound euro exchange rate this week will undoubtedly be the European Central Banks upcoming interest rate decision.
Scheduled for release tomorrow afternoon, the central bank is widely expected to enact another rate cut.
Should the ECB in fact reduce rates further, the single currency will likely falter as a result.
Turning to the pound, UK data will be thin on the ground tomorrow and could see GBP exchange rates remain on the back foot amid a lack of any upcoming economic drivers.