GBP/EUR exchange rate midweek update: pound traverses 1.16 mid-range against euro
Pound to euro (GBP/EUR) exchange rate remains rangebound amid a lull in notable data.
(27/03/2024)
The pound to euro (GBP/EUR) exchange rate was subdued in the 1.16 mid-range on Monday despite positive UK retail data.
The UK currency was reinforced by news that retail sales are starting to stabilise. The Confederation of British Industry’s (CBI) sales data came in well above forecast for March. This marked the end of a 10-month run of dwindling sales, providing hope that the sector’s downturn is bottoming out.
Speaking on Monday, Bank of England policymaker Catherine Mann said her stance on the correct level of interest rates had been finely balanced before her vote to keep them on hold in March. The pound drifted a fraction lower following her comments.
The euro was equally listless amid a data lull and continued contemplation over the European Central Bank’s (ECB) policy path, with a June rate cut receiving most investor bets.
The GBP/EUR exchange rate remained rangebound on Tuesday following the release of the latest GFK consumer confidence index from Germany. The print showed that consumer morale in the Eurozone’s powerhouse economy ticked up in April – but remained deep in negative territory.
Despite the improvement, the ongoing malaise in the German economy continued to generate headwinds for the euro. The pound was treading water as a lack of domestic data left it without a clear direction.
The pair continued to trade sideways in the 1.16 mid-range on Wednesday amid a data lull in the UK and dovish commentary from an ECB policymaker that added to speculation the central bank will unwind rates in June.
Italian economist Piero Cipollone said: “Wage growth appears on track to gradually moderate in the medium term towards levels that are consistent with our inflation target and productivity growth, in line with the projections. As our confidence in the timely convergence of inflation to our target grows, it also strengthens the case for adjusting our policy rates.”
Looking ahead
The latest German retail sales data hit the headlines on Thursday. If a forecast rebound in consumer activity through February materialises, the faltering German economy will receive a welcome boost – potentially supporting the euro.
The UK’s finalised GDP print is released on Thursday. Forecasts suggest the data will confirm that the economy contracted by 0.3% during the fourth quarter of 2023 and the UK slipped into a technical recession – potentially denting the pound.