Will the Pound to Euro exchange rate break out of its current range this week?

It’s been a quiet start to the year for GBP exchange rates, and through the month of February the Pound to Euro exchange rate has remained within a tight trading range.

GBP/EUR has hovered around the 1.1700 level moving slightly above or below this level, with the upside being 1.1740 which is just below the annual high of 1.1770.

To the downside, there appears to be support for the Pound around the 1.1660 level and the pair have barely moved outside of this 80-pip range over the past month.

Those following the Pound will be aware that interest rate changes and the factors affecting the changes are what’s driving the Pounds value at the moment.

The UK is now officially within a recession but expected to bounce back straight away with strong Retail Sales figures released mid-month underpinning these expectations, so even the news of the UK officially entering recession didn’t weaken the Pound enough to see GBP/EUR break below 1.1660.

This week economic data out of the UK is light. The only events that could offer insight into the UK’s monetary policy moving forward and potentially impact the Pound are the speeches from Bank of England members which take place this week. These will take place on Monday, Tuesday and on Friday.

Perhaps the key economic release this week will be out of the Eurozone as Inflation data for Germany, France and Spain will be released individually on Thursday and then the Harmonized reading for the Eurozone as a whole will be released on Friday. This figure is expected to drop to 2.9% for February Year on Year which a drop from the January reading of 3.3%.

The market expectation is that if the reading come out below the expectation of 2.9%, this would underpin expectations of rate cuts and likely weaken the Euro.

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