Euro Pound Exchange Rate Stalls in Spite of Kherson Victory
The Euro Pound (EUR/GBP) exchange rate was buoyed on Tuesday as EU investors acted cautiously in wake of Ukraine’s ‘formula for peace’.
At the time of writing the EUR/GBP exchange rate is trading at around €0.8800, up roughly 0.2% from this morning’s opening rate.
Euro (EUR) Supported by Ukraine Military Successes
The Euro (EUR) is rising against the Pound (GBP) this morning, amid optimism over the war in Ukraine.
On Monday, Ukraine’s president Volodymyr Zelenskiy made a surprise visit to Kherson and in a speech, he delivered said that the recapture of the city marked the beginning of the end of the war with Russia.Uk
This, coupled with the UN condemning Russia’s actions and calling for reparations today is helping to support EUR exchange rates this morning. The Eurozone economy has been disrupted significantly by the conflict so hopes for a road to peace are being welcomed by EUR investors.
Although, a sense of caution could be capping the single currency’s gains this morning. NATO Chief Jens Stoltenberg has stated that Russia should not be underestimated:
‘The coming months will be difficult. Putin’s aim is to leave Ukraine cold and dark this winter. So we must stay the course.’
Pound (GBP) Dented by Mixed Jobs Report
Meanwhile, the Pound is trading in a broad range this morning, following the release of the UK’s latest jobs report.
The unemployment rate was expected to remain unchanged in September. However, the jobless rate rose from 3.5% to 3.6%. While unemployment remains near a 48-year low, the unexpected rise may be seen as another sign that UK economic activity is slowing.
On the other hand, the accompanying wage growth figures beat forecasts. Real pay rose from 5.5% to 5.7% in September lending some support to Sterling. However, with wages continuing to lag behind inflation the squeeze on consumers looks set to endure.
According to Richard Carter, head of fixed interest research at Quilter Cheviot, comments:
‘Although there was growth in average pay this growth is totally eclipsed by the inflation we are experiencing, meaning that people’s pay packets simply will not stretch so far.’
Today’s jobs figures will do little to relieve concerns over the UK’s recession and will likely leave the Pound on the back foot through the day.
Euro Pound Exchange Rate Forecast: UK Inflation to Drive GBP?
Looking ahead, the Euro Pound exchange rate will likely be driven by the UK’s latest inflation data tomorrow.
Headline inflation is expected to rise from 10.1% to 10.7% in October. If this is true, the Pound could get a boost on the expectation of more aggressive policy tightening from the Bank of England (BoE).
However, another surge in inflation could also stoke cost-of-living concerns. Potentially limiting the Pound’s upside potential.
Turning to the Euro, European Central Bank (ECB) policymaker Edouard Fernandez-Bollo is due to speak tomorrow. If he strikes a hawkish tone, then the Euro could get a boost.
