Euro Pound Exchange Rate Rangebound amid Euro Area Economic Uncertainty
The Euro Pound (EUR/GBP) exchange rate is trading narrowly after Eurozone investor confidence deteriorates.
At time of writing the EUR/GBP exchange rate is trading around £0.8546, relatively unchanged from this morning’s opening levels.
Euro (EUR) Quiet amid Disappointing Data
The Euro (EUR) struggled for a clear direction today in the wake of disappointing trade data out of Germany and deteriorating investor confidence in the Eurozone.
A downbeat reading from the Sentix investor confidence index showed a worse-than-expected drop in confidence. September saw investor morale in the Euro area dropped to -21.5 against an expected -19.6. Mounting concerns over the Eurozone economy, especially Germany, is spooking investors. Manfred Huebner, Managing Director at Sentix, said of the situation:
‘The situation in Germany remains particularly precarious. Here we are measuring the weakest situation … since July 2020, when the economy was slowed by the first coronavirus lockdown. Germany is also weighing heavily on the economy in the eurozone as a whole … The tipping point of a global recession is less distant than one might think.’
Pound (GBP) Supported by Elevated Rate Hike Bets
Meanwhile, the Pound (GBP) is finding some moderate support this morning amid a lack of economic data. Sterling appears to be recouping a lot of its losses from last week’s drastic selloff.
With an improving market mood, the riskier Sterling found modest support amongst the risk-chasing investors. Upbeat news out of China buoyed the market mood as Beijing confirmed to provide further economic stimulus for the flagging property sector. Richard Hunter, Head of Markets at Interactive Investor, said of the situation:
‘News from Country Garden that it had secured approval to extend payments for an onshore bond was also of some comfort, while there were also reports that there had been a rise in real estate transactions following Beijing’s moves last week.
The next test of this renewed optimism will come later in the week as China reports its trade balance, imports and exports position on Thursday.’
Furthermore, the prospects of the Bank of England (BoE) continuing their tightening cycle could also be keeping Sterling afloat. A 15th consecutive interest rate increase would bring the cash rate to 5.50%.
Euro Pound Forecast: Rebounding Retail Sector to Rally Sterling?
Looking ahead, the Euro Pound exchange rate could see further movement with the British Retail Consortium’s (BRC) latest retail sales survey.
Market analysts are predicting a 2.2% increase MoM which could lift Sterling on hopes of a recovery in the UK’s vital sector.
Meanwhile, several speeches from ECB policymakers could dent the Euro if a dovish tone is struck amidst the tumultuous Eurozone economy.