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GBP/EUR Exchange Rate Ticks Up following Consumer Confidence
The Pound Euro (GBP/EUR) exchange rate edged higher on Tuesday following the publication of the Eurozone’s latest consumer confidence index. At the time of writing, GBP/EUR traded at around €1.1898, up roughly 0.2% from Tuesday’s opening rate.
Euro (EUR) Dips following Consumer Confidence
The Euro (EUR) was on the back foot against the majority of its peers on Tuesday following the publication of the Eurozone’s latest consumer confidence index. July’s preliminary estimate beat expectations, and rose from -14.0 to -13.0, ahead of a -13.4 expectation, marking the highest reading since February 2022. However, potentially stymieing the Euro’s upside was a mixed market mood. Uncertain trading conditions saw the safe-haven Euro struggle to catch bids even in the wake of the forecast beating release.
Pound (GBP) Undermined by BoE Rate Cut Bets
The Pound (GBP) struggled to catch bids on Tuesday as domestic data was absent from the economic calendar, which left Sterling struggling to find a clear direction. Further undermining Sterling sentiment on Tuesday was a rise in Bank of England (BoE) interest rate cut speculation. As the central bank will meet next week to deliver its next interest rate decision, the odds that the BoE will enact a rate cut have risen from 40% to 50% following several mixed economic data releases. Although the latest inflation data came in hotter than expected, as well as May’s stubborn wage growth data, the UK’s latest retail sales data reported a much larger than expected reduction.
Novo Constare, CEO and co-founder of Indeed Flex commented: ‘A rate cut is a possibility next month but could still be premature while wage growth remains strong and prices in the UK’s dominant services sector continue to rise. However, there is optimism that interest rates will eventually fall from their 16-year high this year, providing a much-needed boost to businesses and enhancing job creation.’
Uncertainty surrounding the potential loosening of monetary policy next week served to undermine the Pound for the majority of Tuesday’s session.
GBP/EUR Forecast: PMIs in Focus
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate this week will likely be the publication of both the UK’s and the Eurozone’s preliminary PMI data. Looking at the Pound, should the UK’s all-important services sector report that the sector continued to accelerate in July, this could support Sterling sentiment during mid-week trade. Turning to the Eurozone, the bloc’s index is forecast to show a mixed reading, with the services index forecast to remain in the expansion zone (a reading over 50) while the manufacturing index is forecast to remain in contraction (a reading below 50). Should the data print as expected, the single currency could waver following the release. Also scheduled for release on Wednesday is Germany’s latest GFK consumer confidence index. Will an expected uptick be enough to lift the common currency? Or will another decline in consumer confidence in the Eurozone’s largest economy serve to stymie the euro instead.
This content was originally published on ExchangeRates.org.uk
