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GBP/EUR Exchange Rate to Remain Subdued Ahead of ECB Speech?

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GBP/EUR Exchange Rate Muted as Investors Await ECB Speech

The Pound Euro (GBP/EUR) exchange rate is trading narrowly today as investors look to a speech from European Central Bank (ECB) policymaker for fresh impetus.

At the time of writing the GBP/EUR exchange rate is trading at around €1.1539, barely changed from this morning’s opening rate.

Euro (EUR) to Remain Muted Ahead of ECB Speech?

The Euro is trading in a narrow range against most of its peers so far this morning, ahead of a speech from an ECB policymaker.

EUR investors speculate that the ECB could increase interest rates by a further 75bps in October’s meeting.

A speech by ECB policymaker Philip Lane could offer more insight into the bank’s stance on future hikes. If he indicates the bank could pursue another bumper hike in October, the Euro might advance.

In the meantime, EUR exchange rates are being driven by a speech by European Commission President Ursula von der Leyen. Von der Leyen delivered her annual State of the EU speech this morning and it hasn’t done much to cheer investors.

In her speech Leyen proposed measures for a revenue cap for low-cost energy companies. She also proposed oil, gas and coal companies to share their profits.

Leyen hopes to funnel profits to EU households that are currently struggling to pay their bills.

It is possible that once the ECB policymakers give their speeches that the proposed action on energy prices could lift the single currency.

For now though, EUR investors response is cautious as they digest the news and await any hints about the next interest rate rise.

Pound (GBP) to be Supported by Lower Inflation?

The Pound (GBP) is finding some support this morning, in the wake of a mixed UK inflation release.

August’s consumer price index reported headline inflation which was previously 10.1%, dropped to 9.9% versus forecasts it would rise to 10.2%.

The fall in headline inflation likely comes as a relief to UK consumers, who have seen their spending power eroded by surging prices in recent months.

However, the core CPI figures reported underlying inflation continued to climb last month. Reaching a new 30-year high of 6.3%.

Investors remain optimistic that lowered inflation will strengthen the Pound, despite the potential for Sterling to be capped by rising core costs.

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