ExchangeRates.org.uk - At the time of writing, GBP/EUR traded at around €1.2083, up roughly 0.2% from Monday’s opening rate.The Euro (EUR) struggled to garner investor attention on Monday as a lack of economic data coupled with an upbeat market mood undermined the common currency.
As a safe-haven currency, any cheery trading conditions usually dampens the Euro’s appeal, leaving it vulnerable against its riskier peers.
EUR investors were also likely reluctant to place any large bets on the singe currency ahead of this week’s European Central Bank (ECB) interest rate decision, scheduled for release on Thursday.
However, the Pound (GBP) managed to firm against several of its peers on Monday despite the absence of any UK data releases, as the British currency was supported by the start of the week’s trading conditions.
As an increasingly risk-sensitive currency, GBP exchange rates were supported by Monday’s positive trade.
However, as the Pound had little else to draw on, Sterling’s gains were fairly limited and saw GBP firm primarily against its safer counterparts rather than its riskier peers.
GBP/EUR Forecast: Eurozone Interest Rate Decision in the Spotlight
Looking forward, the primary driver of movement for the Pound Euro exchange rate looking ahead to this week will likely be the publication of the European Central Bank’s latest interest rate decision scheduled for release on Thursday.
Markets are largely pricing in another 25-basis point interest rate cut from the central bank this week, which would take the rate from 3.25% to 3.00% following a 25bps rate cut in October.
Should the central bank indeed enact another rate cut this month, the Euro will likely slump against its peers on the back of further loosening in the ECB’s monetary policy.
Turning to the Pound, UK data will be largely absent for the majority of the week, and as such, will likely leave GBP exchange rates to trade in line with market appetite for risk.
This content was originally published on ExchangeRates.org.uk