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Euro Pound (EUR/GBP) Exchange Rate Muted amid Downbeat Trading Conditions

EUR GBP Exchange Rate

Euro Pound (EUR/GBP) Exchange Rate Wavers amid Sour Trade

The Euro Pound (EUR/GBP) exchange rate is rangebound today, despite a gradually worsening market mood.

At the time of writing, EUR/GBP is trading at around £0.8541, showing little movement from today’s opening rates.

Euro (EUR) Muted amid Bearish Trade

The Euro (EUR) is wavering today, amid a short supply of market moving data. Because of this, the market mood is playing a key role in shaping its direction, alongside analysis of the latest economic bulletin.

The European Central Bank (ECB) released the summary of its deliberations today, outlining the reasoning behind the central bank’s decision. The minutes indicate that the ECB is expecting to keep rates unchanged for an extended duration, as they aim to curtail inflation.

The minutes read:

‘Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary.’

This prompted pared back interest rate cut bets amongst investors, which is serving to keep EUR afloat. Additionally, bearish trade is likely contributing further cushioning for the safer Euro.

Pound (GBP) Pressured by Lack of Data

The Pound (GBP) endured rangebound trade today, as a lack of market moving data left the currency exposed to a steadily souring market mood.

Geopolitical tensions continued to ratchet in the Middle East, following the rejection of a ceasefire by Israel. This is serving to push investors towards safer assets, leaving the increasingly risk sensitive Pound unable to find its footing.

However, this was offset somewhat by a hawkish speech from Bank of England (BoE) policymaker Catherine Mann. Today, Mann delivered a speech which outlined her reasoning for voting for a 25 bps interest rate hike.

She stated:

‘My vote last week was based on the constellation of prospects for rising real incomes, continued labor market tightness, and positive forward-looking indicators of activity. Plus, financial conditions had eased too much already, with numerous Bank Rate cuts embodied in the market curve and mortgage competition reducing those rates.’

However, the speech appears to not be decisive enough for investors to bet on the Pound, due to the continuing concern over the conflict in the Middle East.

Euro Pound Exchange Rate Forecast: Lack of Data to Limit Pairing?

Looking ahead for the Pound, data releases are set to thin out through to the end of the week’s session. Because of this, GBP may be left exposed to shifts in risk appetite across the markets.

As an increasingly risk sensitive currency, a shift to bearish trading conditions could weaken the Pound against safer peers. However, a shift to bullish trade may support it against its rivals.

For the Euro, the final reading of the latest German inflation rate is due to print tomorrow. If this shows a notable deviation from the preliminary reading of 2.9%, EUR could soften if it cools further.

However, a lack of significant data may keep EUR from finding its footing against its peers.