Bank of England Commentary Not Enough to Boost Pound Euro Exchange Rate
The Pound to Euro (GBP/EUR) exchange rate failed to find any strength on the back of comments from Bank of England (BoE) chief economist Andy Haldane.
While Haldane expressed a much greater degree of optimism over the UK outlook than his colleagues this was not enough to offer Pound Sterling (GBP) any further boost.
With Haldane set to depart the Monetary Policy Committee (MPC) in June investors were reluctant to take any encouragement from his comments.
As the rest of the MPC looks set to maintain a dovish policy outlook for longer the potential for GBP exchange rate gains proved limited on Thursday.
European Central Bank Meeting Minutes Forecast to Weigh on Euro Appeal
Demand for the Euro (EUR) could weaken once again ahead of the weekend, though, with the release of the European Central Bank’s (ECB) meeting minutes.
Any fresh evidence of dovishness within the central bank could weigh heavily on demand for the single currency, with the odds of any future monetary policy action already low.
However, if the minutes express any particular degree of confidence in the prospect of an upcoming growth recovery this could put a floor under EUR exchange rates.
Even with the prospect of tighter monetary policy appearing off the table for the time being any signs of policymaker optimism could shore up the single currency.
As long as the ECB does not appear willing to consider any further loosening of monetary policy this may also help to give the Pound to Euro exchange rate a fresh boost.
Pound Euro Exchange Rate Upside Limited Ahead of UK Labour Market Data
With markets bracing for the next stage of the UK economy’s exit from national lockdown the mood towards the Pound could improve again in the days ahead.
As the economy looks set to experience a further recovery of momentum over the course of the second quarter, with social restrictions continuing to lift, GBP exchange rates may return to an uptrend.
Even so, anticipation ahead of the latest set of UK labour market data could help to limit the strength of the GBP/EUR exchange rate heading into next week.
As long as markets expect to see the headline unemployment rate pick up in March this may leave the Pound exposed to a degree of selling pressure.
While investors remain optimistic of the possibility of a strong 2021 recovery any labour market weakness could still put a dampener on the Pound in the short term.
Any fresh slowdown in average earnings growth could also leave the Pound to Euro exchange rate struggling to push higher on Tuesday.