Introduction to the GBP/EUR Exchange Rate
The Pound Euro (GBP/EUR) exchange rate is expected to experience movement in the upcoming European session, primarily driven by the publication of the UK’s and Eurozone’s latest consumer price indices (CPI). This economic data release is crucial as it will provide insights into the current inflation rates in both regions.
Expected Inflation Rates
The UK’s CPI for July is projected to show inflation edging higher, with forecasts pointing to a rise from 3.6% to 3.7%. If the figures meet expectations, the data could provide the Pound with a lift, strengthening GBP exchange rates in the aftermath of the release. On the other hand, the Eurozone’s latest inflation reading is expected to remain unchanged at 2%, which is the European Central Bank (ECB) target.
Impact on the Euro
The unchanged inflation rate in the Eurozone could undermine the common currency during mid-week trade, especially if the data ramps up current ECB interest rate cut bets. This is because a stable inflation rate may indicate that the ECB does not need to take immediate action to stimulate the economy, which could lead to a decrease in interest rates.
Weekly Recap
The Pound Euro (GBP/EUR) exchange rate edged higher on Monday amid a bout of cheery trade ahead of the Trump-Zelensky meeting. At the time of writing, GBP/EUR traded at around €1.1595, up almost 0.2% from Monday’s opening rate. The Euro (EUR) struggled to garner investor attention against the majority of its peers on Monday despite a lack of any economic drivers.
Market Sentiment
The single currency found itself under pressure as the week began as a positive market sentiment swept markets. As a primary safe-haven currency, EUR exchange rates were undermined by Monday’s risk-on flows, and dipped against almost all of its counterparts. Furthermore, investors were hesitant to place bets on the Euro ahead of a highly anticipated meeting with US President Donald Trump and Ukrainian President Volodymyr Zelensky.
Pound Performance
The Pound (GBP) began the week on uneven footing, moving within a broad range against its major peers as the absence of UK economic data left Sterling largely driven by shifts in risk sentiment. Despite its own sensitivity to risk, the Pound struggled on Monday, slipping against its riskier currencies. At the same time, the improved risk environment limited demand for traditional safe-haven assets, allowing GBP to hold its ground against the US Dollar (USD), and edge higher against the Euro.
Conclusion
In conclusion, the GBP/EUR exchange rate is expected to experience movement in the upcoming European session, driven by the publication of the UK’s and Eurozone’s latest consumer price indices (CPI). The expected inflation rates and market sentiment will play a crucial role in determining the exchange rate. As the economic data is released, investors will be closely watching the reaction of the Pound and Euro, and making informed decisions based on the latest developments.
