Pound Euro (GBP/EUR) Exchange Rate Rangebound amid Risk-Off Trading
The Pound Euro (GBP/EUR) exchange rate is trading within a narrow range today. The Ukraine-Russia conflict is continuing to weigh on the currency pair. Eurozone inflation hit a fresh record-high today which may be limiting losses for the single currency.
At time of writing the GBP/EUR exchange rate is at around €1.1879, virtually unchanged from this morning’s figures.
Euro (EUR) Dips despite Record-High Inflation
The Euro (EUR) is slipping against its rivals today as the war in Ukraine continues to dent confidence in the single currency. A drop German bond yields is also likely weighing on EUR today. Major losses for the Euro may be limited by today’s fresh Eurozone inflation figures however.
Eurozone inflation jumped to 7.5% in March, well above forecasts of 5.9%. The rise was thought to have been largely fuelled by soaring energy prices. Sanctions imposed by the Eurozone on Russia are thought to have also impacted the bloc’s economic performance.
The unexpectedly high rate has placed pressure on the European Central Bank (ECB) to hike interest rates higher than expected. This could in turn prompt further speculative bets on the single currency.
Speaking in a note to clients on Friday, Jack Allen-Reynolds of Capital Economics said:
‘With euro-zone inflation rising even further above the ECB’s forecast, and likely to remain very high for the rest of the year, we think it won’t be long before the Bank starts raising interest rates. We have penciled in three 25 basis points rate hikes for this year.’
Pound (GBP) Slides amid Disappointing PMIs
The Pound (GBP) is dipping lower against many of its rivals today. A retreat to global risk appetite is likely keeping Sterling supressed today in the face on the Russia-Ukraine conflict. A fall to UK manufacturing output is also likely pulling GBP lower today.
Attacks by Russian forces on civilian and infrastructure targets have continued in recent days. Risk appetite may also continue to be limited after Russian officials accused Ukraine of attacking an oil storage facility in the border region of Belgorod.
Gains for the Pound may be limited today as UK manufacturing grew at its slowest pace in 13 months. Manufacturing PMI figures for February fell below forecasts of 55.5 to 55.2 earlier today. Orders also sank to their lowest levels since January 2021 amid supply chain issues and difficulties generated by the Russia-Ukraine conflict.