ExchangeRates.org.uk - At time of writing GBP/EUR was trading at around €1.1925. Down roughly 0.2% from Monday’s opening levels. The Pound (GBP) came under fresh selling pressure on Monday, amid a repricing of BoE rate cut bets. This comes as GBP investors continue to digest recent comments from BoE Governor Andrew Bailey. Sterling nosedived last week after Bailey suggested the bank may act ‘more aggressively’ in regarding to interest rate cuts if UK inflation remains under control. BoE Chief Economist Huw Pill sought to push back against these bets as he warned on Friday against cutting interest rates ‘too far or too fast’. However, in balance it appears that this signals that the debate within the BoE has firmly shifted away from whether more cuts are needed to how quickly the bank’s monetary policy will be unwound. Applying additional pressure to the Pound on Monday was a cautious market mood, linked to ongoing tensions in the Middle East.
Euro (EUR) Muted amid Mixed Data
While it strengthened against the Pound, the Euro (EUR) struggled to replicate this success against its other peers on Monday, following some mixed EUR economic releases. EUR investors were initially dismayed by Germany’s latest factory orders release, as August’s data reported a startling 5.8% contraction in order growth. The single currency then clawed back some of these losses later in the morning as data showed a rebound in Eurozone retail sales in August. However, comments from European Central Bank (ECB) policymaker François Villeroy de Galhau then applied fresh pressure after he suggested the bank will probably cut interest rates again this month.
GBP/EUR Forecast: Weak German Industrial Production Figures to Drag on the Euro?
Looking ahead, the Pound to Euro exchange rate may firm on Tuesday morning, with the release of Germany’s latest industrial production figures. If factory output also came in below expectations in August, it’s likely to stoke bets that the Eurozone’s largest economy may have slipped into a recession this year. Meanwhile, in the absence of any notable UK economic releases, any upside in the Pound may be limited as GBP investors continue to price in BoE rate cut bets.
This content was originally published on ExchangeRates.org.uk