EUR/GBP Exchange Rate Rangebound Following Eurozone Data
The Euro Pound (EUR/GBP) exchange rate is trapped in a narrow range today, following the publication of the latest Eurozone data.
At the time of writing, the EUR/GBP exchange rate is trading at around €0.8616, virtually unchanged from this morning’s opening rate.
Euro (EUR) Fluctuates on Mixed Data
The Euro (EUR) is trading in a wide range today, following the publication of some mixed Eurozone data.
EUR sentiment was initially pulled in two directions by some notable German data. While factory orders printed below expectations in November, a much sharper-than-forecast rebound in exports over the same period saw German record its largest trade surplus since January 2021.
The mixed data leaves EUR investors uncertain of how Germany’s economy fare in the last quarter of 2023, amid fears the Eurozone’s largest economy is at risk of slipping into a recession.
This was then followed by the latest Eurozone economic sentiment and retail sales releases.
The former showed a sharp improvement in December, with the sentiment index climbing from 94 to 96.4. Still in negative territory, but its highest reading since May. Analysts suggest the survey is another sign that the Eurozone is clawing its way out of its recent economic malaise.
However, the Euro’s upside potential remained capped as the accompanying retail sales figures reported a contraction in sales growth in November as weak consumer spending may weaken the European Central Bank’s (ECB) resolve to keep interest rates on hold for longer.
Pound (GBP) Mixed amid Cautious Mood
The Pound (GBP) is mostly subdued today as the absence of any notable UK data leaves Sterling to be driven primarily by market risk dynamics.
A cautious market mood leaves the Pound struggling to attract support. With investors growing increasingly concerned by the situation in the Middle East amid fears that flaring tensions could spark wider conflict in the region.
Elsewhere, speculation over when the Bank of England (BoE) will begin cutting interest rates continues to limit Sterling’s upside potential as investors grow increasingly confident that the bank’s cutting cycle will begin in March.
EUR/GBP Forecast: Upbeat Eurozone Data to Boost Pairing?
Looking ahead, the EUR/GBP exchange rate could climb as we move later into the week.
Tomorrow we can expect the release of Germany’s industrial production figures for November, which are predicted to expand by 0.2%, after registering a 0.4% contraction in October. Should they print as expected, this may bolster the GBP/EUR exchange rate.
Shortly after will see the release of the latest Eurozone unemployment figures, although expected to rise slightly, if the data prints as expected it will still show Eurozone unemployment remained near a multi-year low, ultimately underpinning the Euro.
Turning to the Pound, data remains thin on the ground through the first half of this week.
On Friday, the UK will publish its latest monthly GDP report. November’s figures are expected to show the UK economy expanded by 0.2%, rebounding from October’s 0.3% slump. Could this strengthen hopes that the UK may have avoided a recession in 2023 and help boost GBP exchange rates?
