GBP/EUR Exchange Rate Rangebound as BoE Rate Decision in Focus
The Pound to Euro (GBP/EUR) exchange rate is currently in a holding position this morning as markets await the Bank of England’s (BoE) first rate decision of 2020.
At the time of writing the GBP/EUR exchange rate is trading at around €1.18175, virtually unchanged from this morning’s opening rate.
Possible BoE Rate Cut Hangs over the Pound (GBP)
The Pound (GBP) hangs in the balance this morning as markets brace for the BoE’s latest rate decision later this afternoon.
The bank looks close to easing its monetary policy for the first time for the first time in three years, with markets pricing in a 50% chance that Mark Carney will mark his end as Governor of the BoE will a rate cut.
With the UK economy appearing to stagnate at the end of 2019, there is certainty a solid case for the BoE to cut rates and help to shore up confidence as the UK prepares to leave the EU.
However, the cut is far from a done deal with a number of analysts speculating that the bank will stay its hand until March when Andrew Bailey takes the helm.
Accelerating German Inflation to Buoy the Euro (EUR)?
At the same time, the Euro (EUR) mat tick higher later this afternoon with the publication go Germany’s consumer price index (CPI).
Economists forecast the CPI figures will show Germany inflation continued to accelerate at the start of 2020, rising from 1.5% to 1.7% in January.
The bump in inflation will be welcomed by EUR investors as it bolsters hopes the Eurozone’s largest economy may begin to pick up the pace again this year.
GBP/EUR Forecast: Brexit Jitters to Continue to Drag on Sterling?
Looking ahead, the Pound to Euro (GBP/EUR) exchange rate may come under pressure at end of the week as the UK formally exits the EU.
After more than three years of uncertainty, the UK will leave the EU at 11:00 GMT on Friday, bring the first chapter of the Brexit saga to an end.
However, with there still being a very real threat of a no-deal Brexit at the end of 2020 if Boris Johnson is unable to secure a trade deal by December, Sterling sentiment may remain in the doldrums for some time to come.
Meanwhile, the Eurozone will close out the week with the publication of its latest GDP figures, which may offer some support to the Euro if growth in the bloc began to accelerate again at the end of 2019.