GBP/EUR exchange rate midweek update: pound largely trades sideways versus euro
25/11/2024 to 27/11/2024: With economic data thin on the ground, the pound euro (GBP/EUR) exchange rate was influenced by events on the other side of the Atlantic, as Donald Trump's new trade tariff proposals bolstered the euro.
Monday
The pound euro (GBP/EUR) exchange rate began the week on the back foot, despite hawkish comments from Bank of England (BoE) Deputy Governor Clare Lombardelli, who said it was “too early to declare victory on inflation”.
The pair began edging lower as Donald Trump’s Treasury Secretary nomination, Scott Bessent, assuaged concerns about US tariffs damaging the Eurozone economy, eventually touching a low of 1.964. This caused the safe haven dollar to fall amid a cheery market mood, prompting the euro to firm due to its negative trading correlation with the US currency.
Tuesday
The pound wavered versus the euro amid general market volatility and the announcement of Donald Trump’s proposed tariff plans – a 25% tax on goods entering the US from Canada and Mexico. With the bloc excluded from the fresh proposals, market concerns about the impact of Trump’s new tariffs on the Eurozone economy were allayed, bolstering the single currency.
The Confederation of British Industry’s (CBI) latest distributive trades survey reported a larger-than-expected drop in retail sales volumes, which was largely shrugged off by investors.
Wednesday
The pound euro exchange rate traded sideways a fraction below €1.20 amid a lack of UK economic data and underwhelming figures from the Eurozone.
A closely watched survey showed Germans are preparing to tighten their belts rather than boost private consumption in Europe's largest economy as we enter the busy Christmas shopping period.
The Gfk Consumer Climate Indicator fell by 4.9 points to -23.3 points, revealing declining consumer morale for next month. The forward-looking indicator was expected to print at -18.6.
Looking ahead
German consumer price data for November hits the headlines on Thursday. If it comes in line with forecasts and posts a slight uptick in headline inflation, the euro could firm amid reduced European Central Bank (ECB) interest rate cut bets.