ExchangeRates.org.uk - At the time of writing, GBP/EUR traded at around €1.1838, virtually unchanged from Thursday’s opening rate.
Euro (EUR) Flat despite Downbeat Industrial Production
The Euro (EUR) managed to hold steady against the majority of its peers on Thursday despite the Eurozone’s latest industrial production index missing forecasts. April’s reading unexpectedly fell from a previous reading of 0.5%, to a negative reading of 0.1%, falling short of market expectations of a positive 0.2% figure. Not only did the latest index print below estimates, April’s reading also marked the first drop within a three-month period. However, despite the lacklustre reading, the Euro managed to stay afloat against the majority of its peers on Thursday thanks to overall confidence within the sector.
Leo Barincou, Senior Economist at Oxford Economics, commented: ‘Despite today’s lacklustre print, we still think [Europe's] industrial sector hit a trough in the first quarter and will register sustained growth soon. In the near term, industry will benefit from a turning inventory cycle as companies rebuild their inventories. Gradual monetary loosening will also be a major tailwind.’
Pound (GBP) Subdued amid Lull in Data
The Pound (GBP) traded sideways against the majority of its peers on Thursday as a continued lack of UK data saw GBP exchange rates struggle to find a clear trajectory. However, deferred Bank of England (BoE) interest rate cut bets saw GBP exchange rates remain above ground on Thursday. With markets now expecting just one interest rate cut to be delivered from the Bank of England this year, Sterling sentiment is being underpinned despite the absence of UK macroeconomic data.
Yael Selfin, Chief UK economist at KPMG, said: ‘While we are seeing some tentative signs of cooling in the labour market, service sector inflation remains persistently high and it is likely the MPC would want to wait until the next set of forecasts and a few more data points before it embarks on its first rate cut.’
GBP/EUR Exchange Rate Forecast: ECB Speeches to Drive Movement?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate for the remainder of this week will likely to be a number of European Central Bank (ECB) speeches. Following the European Central Bank’s first rate cut last week, ongoing speculation that the ECB could deliver another interest rate cut this year has weighed on the common currency through to this week. With ECB official Bostjan Vasle affirming that the ECB remains open to further rate cuts, should policymakers including the ECB’s Vice-President Luid de Guindos further hint that additional rate cuts are on the table, this will likely see the single currency struggle at the end of this week. Turing to the Pound, a continued lull in UK data releases moving into Friday will likely see GBP exchange rates continue to tread water, and struggle to find a clear trajectory. As such, risk appetite will likely drive the Pound. Should a cautious market mood prevail, Sterling sentiment is likely to remain limited, however, should more upbeat trading conditions triumph, GBP exchange rates could close the week on the front foot.
This content was originally published on ExchangeRates.org.uk
