Pound Euro (GBP/EUR) Exchange Rate Rises amid Downbeat Eurozone Outlook
The Pound Euro (GBP/EUR) exchange rate is strengthening today, as analysis of the Eurozone’s economy remains downbeat.
At the time of writing, GBP/EUR is trading at around €1.1637, an increase of just over 0.3% from the morning’s opening rates.
Will Improving German Trade Lift EUR?
Despite an upward revision in November’s manufacturing PMI, the Euro (EUR) appears unable to gain ground during today’s trade. The sector remains firmly in contraction territory, with the accompanying analysis suggesting lacklustre data.
As such, continuing economic gloom is serving to undercut the common currency today, as investors consider the likelihood of a Eurozone recession.
Looking ahead to early next week, German trade data for October is due to print on Monday. Economists currently forecast an expansion in the trade surplus, which could boost EUR by suggesting improving exports.
On Tuesday, the final print of the latest service PMI is scheduled for release. If November’s reading is revised upwards like the manufacturing print, EUR could strengthen. However, if it remains bleak reading, the common currency could slip.
Elsewhere, continued adjustment of ECB interest rate bets is likely to drive the common currency. The expectation is growing that the ECB will be looking toward rate cuts in 2024, which may weigh on the Euro next week.
GBP to Remain Rangebound amid Lack of Data?
Today, the Pound (GBP) is languishing against its peers due to a lack of impactful data releases. Because of this, Sterling is rangebound against most rivals, despite gaining ground against the Euro.
However, GBP is enjoying modest cushioning following an upward revision to the latest manufacturing PMI. In November, activity instead increased to 47.2, up from preliminary readings of 46.6.
Looking ahead to Monday, the data drought is set to remain in effect, which could serve to limit the Pound’s movements.
As an increasingly risk sensitive currency, a shift towards bearish trade could weaken Sterling against safer peers such as EUR.
However, if the market mood improves and risk appetite increases, the Pound could strengthen against the Euro.
Additionally, markets expect the Bank of England (BoE) to remain more hawkish than other central banks, which may keep GBP underpinned against its peers.