Introduction to the Pound Euro Exchange Rate
The Pound Euro (GBP/EUR) exchange rate is expected to experience movement during Wednesday’s European session, primarily driven by the release of the UK’s latest labour market report. This report will provide insightful data on unemployment and wage growth in the UK.
Unemployment and Wage Growth in the UK
Unemployment in May is forecast to remain unchanged. However, the UK’s latest wage growth earnings are predicted to drop from 5.2% to 4.9%. If average earnings (excluding bonuses) decline as projected, this could negatively impact Sterling, potentially leading to a decrease in its value against the Euro as the week progresses.
Impact of the Euro’s CPI Data
Looking at the Euro, the bloc’s finalized Consumer Price Index (CPI) data for June could have a significant impact on the common currency. If the CPI prints as expected, confirming that inflation has reached the European Central Bank’s (ECB) 2% target, this could potentially hobble the Euro on Thursday.
Daily Recap of the Pound Euro Exchange Rate
On Wednesday, the Pound Euro (GBP/EUR) exchange rate traded mostly flat, despite the release of the UK’s latest consumer price index (CPI) data. At the time of writing, GBP/EUR was trading at around €1.1522, virtually unchanged from Wednesday’s opening rate. The Pound (GBP) was trapped in a narrow range against most of its peers, despite some forecast-beating UK CPI data.
UK Inflation Data
The UK’s inflation reading for June showed a rise in headline inflation from 3.4% to 3.6%, and an increase in core inflation from 3.5% to 3.7%. This unexpected warming in UK inflation failed to significantly impact Bank of England (BoE) interest rate cut bets, as markets awaited more high-impact data due out during the week.
Expert Insights
Chris Beauchamp, Chief Market Analyst at IG, commented, "Today’s CPI data spells more pressure for consumers thanks to the surge in food prices, but the overall picture doesn’t quite spell the end for any further rate cuts. Core goods and services inflation was broadly contained, and the focus shifts now to the job numbers tomorrow to see if there are further signs of weakness that might keep the Bank of England on course to ease policy in upcoming meetings."
Stability of the Euro
The Euro (EUR) was stable against almost all of its counterparts on Wednesday, despite France’s political instability making headlines once again. News that the French Prime Minister announced the scrapping of two national holidays to ease pressure on the deficit led the National Rally party to threaten to topple the government unless the proposal is reversed. However, the single currency managed to hold steady against the majority of its rivals during mid-week trade.
Conclusion
In conclusion, the Pound Euro exchange rate is likely to experience fluctuations due to the release of key economic data, including the UK’s labour market report and the Euro’s finalized CPI data. The stability of the Euro, despite some political instability in France, and the potential impact of the UK’s inflation data on interest rate cut bets, are also important factors to consider. As the week progresses, these factors will continue to influence the GBP/EUR exchange rate, making it essential to stay informed about the latest developments in the currency market.
