GBP/EUR Exchange Rate Subdued amid Lack of Economic Data
The Pound Euro (GBP/EUR) exchange rate is trading mostly flat this morning, amid the absence of any notable UK or Eurozone data.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1710, virtually unchanged from this morning’s opening rate.
Pound (GBP) to Fluctuate following BoE Decision?
The Pound (GBP) could experience volatility next week as investor focus shifts to the upcoming Bank of England (BoE) interest rate decision, expected on Thursday.
As the BoE is widely expected to keep interest rates at a 16-year high of 5.25% for the fifth consecutive time, investors will likely focus on the accompanying forward guidance for any potential hints at the timing of upcoming rate cuts.
With current expectations that the central bank will not begin loosening its monetary policy until August, any dovish rhetoric from policymakers during Thursday’s accompanying press conference could weigh on Sterling sentiment.
Before that, the UK’s latest inflation data for February is scheduled for release, on Wednesday.
In recent weeks, the Office for Budget Responsibility (OBR) has predicted that UK inflation is set to fall to 2% in the second quarter of 2024.
Should the inflation data align with the OBR’s forecasts and point to an a rapid cooling this could see GBP exchange rates slump.
Euro (EUR) to Firm amid Improving German Economic Sentiment?
The Euro (EUR) could be bolstered at the start of next week, as Tuesday will see the release of the latest ZEW Economic Sentiment index for Germany.
Economic sentient in the Eurozone’s largest economy is expected to increase in February, from 19.9 to 20.5.
Should the data match expectations, this would mark the eighth consecutive rise in economic sentiment in Germany, and would likely buoy EUR exchange rates.
On Thursday, the Eurozone’s preliminary manufacturing and services PMIs for March are scheduled for release.
The PMIs are expected to show the bloc’s private sector finally returned to growth after a nine-month contraction, potentially bolstering the Euro as it may encourage the European Central Bank (ECB) to hold off a while longer before beginning to cut interest rates.
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