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Pound Euro Exchange Rate News: GBP/EUR Flat, Hawkish ECB Minutes to Offer Support to Euro?

European Central Bank

GBP/EUR Exchange Rate to Soften Following ECB Minutes?

The Pound Euro (GBP/EUR) exchange rate is range bound this morning, as ahead of the publication of the minutes from the European Central Bank’s (ECB) recent policy meeting.

At the time of writing the GBP/EUR exchange rate remains virtually unchanged this morning, having stabilised after slumping half a cent on Wednesday.

Pound Euro (GBP/EUR) Exchange Rates Flat Ahead of ECB Minutes

The Pound (GBP) is trading in a narrow against the Euro (EUR) this morning as markets await the release of the minutes from the European Central Bank’s (ECB) December policy meeting.

Last month’s meeting saw the ECB bring an end to its substantial stimulus programme, in what was seen as a signal that the bank was on track to begin raising interest rates in 2019.

However since the meeting, a run of weak Eurozone data and growing concerns of a global slowdown have slashed expectations of a rate hike this year, with many economists forecasting that the ECB’s hike will be delayed into 2020.

Mathias van der Jeugt, head of market research at KBC in Brussels suggests:

‘The rate hike trajectory in the euro area has essentially been pushed back by 12 months, and that reflects the massive repricing in rate expectations in the U.S. and Europe.’

However some of these concerns may be offset this afternoon if the ECB minutes downplay the recent slowdown in the Eurozone, while pointing to the recent jump in wage growth and employment as a sign that the bloc is ready for a hike this year.

GBP/EUR Exchange Rate Forecast: Rebound in UK Industrial Production to Strengthen Sterling?

Looking ahead, the Pound Euro (GBP/EUR) exchange rate may be offered some respite from Brexit on Friday morning, with the publication of the UK’s latest production and trade figures.

Economists forecast that tomorrow’s data will show that November will have seen domestic industrial production rebound as well as a narrowing of the UK’s trade deficit, potentially lending some support to Sterling.

However the accompanying release of the UK’s monthly GDP reading may offset these potential gains if economic growth remained subdued through the same period.

Meanwhile, outside of this afternoon’s ECB minutes, the Eurozone has exhausted its data for the week, leaving EUR investors to turn their attention to next week’s releases.

Of particular note will be the release of Germany’s full GDP report for 2018, with the Euro likely to be met by losses if Europe’s largest economy is shown to have fallen into a recession in the fourth quarter and some economists suspect.