Pound to Euro Exchange Rate Movement Mixed as Investors Await Data
Yesterday saw the Pound Sterling to Euro (GBP/EUR) exchange rate rebound from its worst levels all January so far, but the pair has lacked the drive needed to recover all of Monday’s steep losses. Investors are currently awaiting further datasets.
Since opening this week at the level of 1.1749, GBP/EUR has trended lower following a slump when markets opened on Monday. This saw GBP/EUR briefly dip to a January low of 1.1636.
GBP/EUR rebounded slightly yesterday but only climbed to around 1.1700. GBP/EUR continues to trend near this level at the time of writing.
Both currencies lack drive, as even after today’s key UK and EU stats come in there are more influential figures anticipated in the coming days.
Pound (GBP) Exchange Rates Remains Pressured amid Bank of England (BoE) Bets
The Pound (GBP) experienced a slight rebound in demand yesterday. Investors were hesitant to keep selling the British currency as Bank of England (BoE) interest rate cut bets only remained at around 50%.
However, despite yesterday’s rebound the British currency’s movement has already steadied. This morning, Sterling is slipping slightly against major rivals like the Euro as Bank of England (BoE) interest rate cut bets continue to keep up the pressure.
While it didn’t come as much of a surprise, Bank of England (BoE) policymaker Michael Saunders indicated he would vote for rate cuts amid concerns about Britain’s economy stagnating.
Saunders was one of the two policymakers who voted for a rate cut in the bank’s previous policy decision. Speaking today, he said:
‘It probably will be appropriate to maintain an expansionary monetary policy stance and possibly to cut rates further, in order to reduce risks of a sustained undershoot of the 2% inflation target.’
Euro (EUR) Exchange Rates Steady as European Central Bank (ECB) Officials Avoid Dovishness
While market demand for the Euro (EUR) has been limited in recent sessions, support for the shared currency continues to gradually improve.
On top of decent data in recent weeks, including today’s slightly better than expected French inflation rate results, European Central Bank (ECB) officials have also been expressing some optimism over economic recovery in the Eurozone.
Two ECB officials said yesterday that they believed the Eurozone economy was showing more signs of recovery. Villeroy de Galhau said that the chances of a Eurozone recession could more or less be excluded, while Yves Mersch said there were fresh signs of stabilisation.
According to Mersch:
‘We’ll see whether we will still have risks to this scenario being skewed to the downside,
Certainly they are less skewed to the downside.’
Pound to Euro (GBP/EUR) Exchange Rate Still Awaits Further Inflation Data
While French and UK inflation results are likely to drive central bank speculation and the Pound to Euro (GBP/EUR) exchange rate’s movement today, direction may remain limited due to market anticipation for further upcoming stats.
More key Eurozone inflation figures will be published through the end of the week, with German inflation due tomorrow and overall Eurozone inflation data on Friday.
If the Eurozone’s inflation outlook improves, the European Central Bank (ECB) may become more confident that the Eurozone economic outlook is improving.
Thursday will also see a speech from ECB President Christine Lagarde. If she expresses optimism over the Eurozone outlook as well, Euro support may strengthen.
As for the Pound, investors are still eagerly awaiting Friday’s UK retail sales results. If this data falls short as well, Bank of England (BoE) interest rate cut bets will rise further and the Pound to Euro (GBP/EUR) exchange rate will weaken.