Pound Euro (GBP/EUR) Exchange Rate Dips amid Hawkish ECB Rhetoric
The Pound Euro (GBP/EUR) exchange rate is weakening this morning, following hawkish comments from European Central Bank (ECB) policymakers.
At the time of writing, GBP/EUR is trading at around €1.1299, a fall of roughly 0.2% from the morning’s opening rates.
Will GBP Weaken amid Downbeat CBI Data?
Today, the Pound (GBP) could see little in the way of firm movements. With data releases thin on the ground for the rest of the European session, Sterling could trade on market sentiment.
If the market mood continues to trade in a mixed fashion, GBP may be unable to gain ground against the safer Euro. However, if this shifts to more cheery trade, Sterling could rally against safer investments due to it’s increasingly risk sensitive nature.
Tomorrow, a duo of releases from the Confederation of British Industry (CBI) could bring some impetus. While an improvement in industrial trends over April is forecast, the figure is still expected to print negatively at -16. Because of this, it may prove difficult for GBP investors to take much solace in the improvement.
Furthermore, the latest business optimism index for Q2 is forecast to fall from -5 to -15. If this prints in line with economists’ expectations, GBP could weaken on signs of increasing pessimism for the UK’s economic outlook.
Will EUR Waver amid a Lack of Data?
Today, the Euro (EUR) could see further movement as markets continue to digest the latest Ifo business climate data. April’s data for Germany did show an improvement in optimism, but came in below forecasts of 94 by printing at 93.6.
As such, the common currency is wavering, despite an improving economic climate in the bloc’s largest economy. Furthermore, a mixed market mood is preventing the safe-haven Euro from gaining much ground.
Tomorrow, the Euro may trade in tandem with market sentiment, amid a lack of impactful data releases. If the market mood sours, EUR could strengthen against riskier assets.
Furthermore, developments in the Ukraine Russia war may continue to sway the currency. Today, a drone attack over Crimea was repelled by Russian naval forces. With further potential for escalations apparent, EUR investors may remain cautious over the course of today’s session.
Similarly, threats from Russia to terminate the grain deal could continue to weigh on the common currency. If this threat is acted upon, it could weigh on EUR investors and prompt weakness in the Euro.
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