GBP/EUR Exchange Rate Firms amid Cheery Trade
The Pound Euro (GBP/EUR) exchange rate firmed today as cautiously optimistic trade boosted the increasingly risk-sensitive Pound (GBP), amid a lack of data.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1527, up approximately 0.3% this morning’s opening rate.
Pound (GBP) Declines amid Falling Inflation
The Pound (GBP) firmed today amid an increasing appetite for risk, with notable UK data in short supply.
Looking to next week, the Pound may trade without a clear direction, as UK data remains sparse.
On Monday, the Confederation of British Industry’s (CBI) monthly retail sales balance is due for release. Retail sales in November to are expected to rise to -6, significantly higher than October’s reported -36. Such an increase may offer Sterling some modest support amid signs of a gradually strengthening retail sector.
However, should consumer spending remain close to multi-month lows, GBP could face heavy selling pressures under renewed signs of easing within UK retail.
For the remainder of the week, a lack of data may leave Sterling vulnerable to commentary from Bank of England (BoE) policymakers. With a series of speeches due, investors may look to BoE speakers for any indication of future monetary policy decisions. While recent commentary from senior policymakers has been increasingly unclear, a notably hawkish stance may see GBP strengthen.
On Friday, the UK’s finalised manufacturing PMI is due for release. While this week’s preliminary reading reported slower-than-forecast contraction which lent GBP some support, any significant deviations in the finalised index may drive movement.
Euro (EUR) Mixed amid Economic Pessimism
The Euro (EUR) wavered today following the latest German GDP data, which confirmed that Germany continues to skirt with domestic recession.
Looking ahead, European Central Bank (ECB) President Christine Lagarde is due to speak on Tuesday, with any hawkish commentary potentially boosting the Euro. However, amid signs of economic slowing, investors may expect tepid commentary at best.
On Thursday, the Eurozone’s latest inflation data is due and is likely to be the main catalyst of EUR movement next week. While annual inflation is forecast to edge higher to 2.9% in November’s preliminary reading, ECB interest hikes may rise amid signs of sticky inflation, thereby lifting the common currency.
On Friday, the Eurozone’s finalised PMI readings are due. Should the data print in line with preliminary index reports, it may have little significant impact on EUR volatility, though confirmation of economic contraction within the Eurozone may serve to undercut ECB rate hike bets, stifling investor interest in the Euro.