Pound to Euro Exchange Rate Struggles for Direction amid Economic Uncertainties
The Pound Sterling to Euro (GBP/EUR) exchange rate has been able to sustain most of the solid gains seen last week, but the pair is struggling to register further gains. Sterling (GBP) is limited ahead of the Bank of England’s (BoE) January decision this week.
Last week was solidly bullish for GBP/EUR, with the pair opening the week at the level of 1.1735 and gaining over a cent to close the week at the level of 1.1858.
While GBP/EUR was unable to hold Friday’s monthly high of 1.1901, the pair hasn’t slipped too far from those highs either. At the time of writing, GBP/EUR is trending within a tight region near the week’s opening levels.
Movement in both the Pound and the Euro (EUR) will likely remain limited until more of this week’s key news is published. This includes the January BoE decision, as well as key Eurozone data.
Pound (GBP) Exchange Rate Bullishness Limited as Bank of England (BoE) Uncertainty Persists
Last week saw the Pound surge in demand, as UK data beat forecasts and softened speculation that the Bank of England (BoE) would be pressured into cutting UK interest rates this month.
Sterling remains strong on these bets, and has been able to hold most of last week’s gains. However, investors are hesitant to buy the Pound much higher either.
The Pound’s rally slowed on Friday. While UK PMI projections beat forecasts, concerns persisted that they did not totally douse the chances of a January rate cut from the BoE.
While BoE rate cut bets for this week are currently under 50%, the possibility remains and this is keeping investors from making big movements on the Pound for the time being.
Even if a rate cut does not occur this month, many analysts predict one could happen in the coming months regardless. This is also keeping Sterling from further gains for now.
Euro (EUR) Exchange Rates Weighed as German Confidence Falls Short
Last week’s European Central Bank (ECB) policy decision was not as optimistic as some investors had hoped, leaving the Euro’s strength limited towards the end of last week.
This week so far the Euro remains limited. The Euro is unable to benefit from rising demand for safe haven currencies amid the coronavirus outbreak in China, and today’s German confidence stats disappointed.
Ifo’s German business climate, current conditions and expectations stats all fell short of forecasts in January prints.
The data continued the recent trend of mixed Eurozone data. Recent data is showing signs of recovery in the Eurozone economic outlook, but not enough to make markets confident that growth will rebound this year.
Pound to Euro (GBP/EUR) Exchange Rate Outlook Awaits Key Data and Bank of England (BoE)
This week could be a highly influential one for the Pound to Euro (GBP/EUR) exchange rate. There are many key Eurozone ecostats due in the week ahead, and the Bank of England (BoE) will be holding its highly anticipated January policy decision.
No notable data will be published tomorrow, but German and French consumer confidence figures are due to come in on Wednesday.
Thursday and Friday will be very notable sessions with slews of key news.
Thursday’s Bank of England (BoE) decision could be the biggest news of the week for GBP/EUR. Pound investors will be eagerly awaiting the bank’s tone on Britain’s economic outlook, amid the mixed data of recent weeks.
If the BoE leaves the door open for rate cuts or even surprises investors with a rate cut this week, the Pound could shed much of last week’s gains and slump.
On the other hand, if the bank shows confidence in a UK economic rebound the Pound could see a fresh surge in demand.
Developments on the Eurozone economic outlook, in response to late-week Eurozone data, will also be highly influential for the Pound to Euro (GBP/EUR) exchange rate outlook.