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Pound Euro (GBP/EUR) Exchange Rate Forecast: Will German Inflation Figures Bolster the Euro?

GBP/EUR Exchange Rate Slides in Run up to German CPI Data

The Euro (EUR) is making steady gains against the Pound (GBP) this morning, pushing the GBP/EUR exchange rate to a close to a two-month low.

At the time of writing the GBP/EUR exchange rate’s losses total around 0.2% so far today, with further losses expected later this afternoon.

Euro (EUR) Exchange Rate Strengthens, German Inflation in Focus

The focus for Euro (EUR) investors today is highly likely to be on the flash release of Germany’s June Consumer Price Index (CPI), offering markets their first look at how inflation is faring in the Eurozone this month.

Current forecasts suggest that prices pressures in Germany will have remained fairly robust this month, with inflation expected to slide slightly, but still hold above 2% for only the second time in over a year.

While the European Central Bank’s (ECB) recent pledge to leave interest rates on hold until ‘at least summer 2019’ means that the robust CPI figures are unlikely to lift rate expectations, a positive reading would still indicate the Eurozone’s largest economy expanding healthily, likely lifting the Euro.

EUR/GBP Undermined by Fears of EU ‘Cracks’

At the same time the Euro’s (EUR) advance this morning may have been undermined slightly by fears that the cracks are beginning to show within the European Union.

EU Commission chief Jean-Claude Juncker warns ‘The fragility of the EU is increasing, the cracks are growing in size.’

These fractures within the EU have been highlighted in recent years by the growing migrant crisis, with many southern members becoming increasingly resentful as they struggle to deal with the influx of migrants from over the Mediterranean.

The issue is likely to dominate a two-day summit of leaders starting later today, with EUR investors likely to pay close attention to whether how these fissures may impact the stability of the EU as a whole.

Pound (GBP) Exchange Rate Feels the Pressure of Brexit

Meanwhile the Pound Sterling (GBP) exchange rate continues to feel the drag of Brexit uncertainty this morning as Theresa May is warned over the ‘disappointing’ progress in talks.

Irish Prime Minister, Leo Varadkar has told May that talks need to ‘intensify’ and has called for fellow EU leaders to send a ‘strong message’ to the UK regarding its Brexit negotiations.

However this is easier said than done as May faces considerable hurdles in persuading her cabinet to agree on a blueprint, with the UK’s future customs agreement with the EU appearing to be the chief point of contention.

GBP/EUR Exchange Rate Forecast: Will Haldane Speech Bolster BoE Rate Expectations?

Looking ahead, the Pound Euro (GBP/EUR) exchange rate may be moved by a speech from the Bank of England’s (BoE) Andy Haldane later this afternoon.

This could see the Pound look to move higher should Haldane discuss his shock decision to vote for an immediate rate hike this month and if he believes a hike may be possible by the end of summer.

Meanwhile looking past today’s inflation figures, Germany’s latest retail figures could hamper the EUR exchange rate tomorrow morning, with a contraction in sales growth in May likely to drag on the Euro