GBP/EUR Exchange Rate Wavers Despite Poor BoE Outlook
The Pound Euro (GBP/EUR) exchange rate is fluctuating today amid the dire economic outlook issued by the Bank of England (BoE).
At time of writing the GBP/EUR exchange rate is around €1.1860, relatively unchanged from the morning’s opening levels.
Pound (GBP) Trades Narrowly Despite Facing Multiple Headwinds
The Pound is struggling for demand today amid the bleak economic uncertainty the UK finds itself mired in. With the cost-of-living crisis worsening, and inflation is set to peak at 13% by the autumn, there is little to entice investors.
Meanwhile, political uncertainty looks set to continue keeping a lid on any meaningful gains by the Pound. Leadership candidates Liz Truss and Rishi Sunak continue to battle it out over conflicting and contrasting fiscal policies with the former provoking criticism once again.
In an interview with The Times, Truss outlined that she had no plans on providing benefits or one-off financial aids to those most vulnerable. The statement drew criticism from across the board as the cost-of-living crisis is set to worsen further with the rising energy cap set to increase household bills and will have potentially trebled since 2019.
Looking ahead, and all eyes will be on the crucial GDP growth data released on Friday. If forecasts prove accurate and the UK economy contracts, the Pound could encounter strong headwinds as it prepares for a looming recession.
Euro (EUR) Fluctuates on Waning Global Market Sentiment
The Euro (EUR) is seeing mixed success against its peers today as a myriad of headwinds look set to weigh heavily on the single currency.
Geopolitical tension is set to linger and could affect the Euro going forward. After China warned against the US from visiting Taiwan, US House Representative Speaker Nancy Pelosi still went ahead with the first senior US representative in 25 years. China reacted by conducting live-fire drills around Taiwan and has since shelved plans for talks with US President Joe Biden, souring relations once again.
Looking ahead to the rest of the week, the Euro will fluctuate on market sentiment until the publishing of German CPI data for July. An expected softening of inflation in the bloc’s largest economy could exert further pressure on the Euro as future rate hike bets could cool.
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