GBP/EUR Exchange Rate Awaits UK/Eurozone Data

At the time of writing, the GBP/EUR exchange rate traded at around €1.1859, down roughly 0.2% from the start of Friday’s opening levels.

Euro (EUR) Mixed amid ECB Rate decision Week

The Euro (EUR) began the week trending mostly flat against its peers as some underwhelming Eurozone data left the currency struggling to attract support.

Industrial production in the Eurozone declined by 0.6% in May. However, as this was better than the expected 1% contraction, this prevented further EUR losses.

On Tuesday, the latest German ZEW economic sentiment index reported a larger-than-expected decline in July, marking its lowest level in four months, which undermined the single currency.

Looking at mid-week trade, the Eurozone’s finalised inflation rate confirmed a cooldown in domestic inflation, however, the Euro was able to strengthen thanks to its strong negative correlation with the US dollar (USD), as the latter faced fresh selling

pressure.

On Thursday, The European Central Bank delivered its latest intrest rate decision, which saw the central bank leave rates unchanged at 4.25% as expected.

However, ECB President Christine Lagarde said that a rate cut in September was ‘wide open’, which saw the common currency struggle to attract support.

The Euro closed the week rangebound against the majority of its peers as an absence of economic data saw the currency struggle to find clear direction.

Pound (GBP) Fluctuates following Significant Data

The Pound (GBP) started the week subdued against the majority of its counterparts amid a lull in UK data.

On Wednesday, Sterling managed to climb following the release of the UK’s latest consumer price index.

The Office for National Statists (ONS) reported that headline inflation remained at the Bank of England (BoE)’s 2% target while core

inflation also remained at 3.5%.

Both indices were forecast to fall, which lent GBP some modest support, alongside sticky services inflation. The services index held at 5.7%, which ultimately undermined the odds of an August interest rate cut.

However, on Thursday, the Pound relinquished its gains following the release of UK’s latest jobs data.

The Office for National Statistics revealed that UK unemployment held at 4.4%, while average earnings (excluding bonuses) decreased, falling from 6% to 5.7%.

The fall in regular wage growth acted as a catalyst to revive BoE interest rate cut bets, with the likelihood of a rate cut in August increasing from 35% to 40% following the publication.

Looking at the end of the week, the Pound remained on the defensive as the UK’s latest retail sales reported a bigger-than-expected contraction in May, which saw GBP exchange rates undermined at the end of week.

GBP/EUR Exchange Rate Forecast: Eurozone Data in the Spotlight/

Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate this week will likely be the publication of several data release from within the Eurozone.

On Tuesday, the Eurozones preliminary consumer confidence index is scheduled for release and could undermine the common currency should the data show a decline in consumer morale.

Moving into mid-week trade, both the UK and the Eurozone will publish their preliminary PMIs for July. Should either index show any surprise readings, GBP/EUR could fluctuate during the first half of the week.