Pound to Euro: Rangebound

September 4, 2024 - Written by John Cameron

STORY LINK Pound to Euro: Rangebound

The Pound Euro (GBP/EUR) remained mostly unchanged on Tuesday after the release of the latest retail sales monitor by the British Retail Consortium.

At the time of writing, the GBP/USD was trading at around $1.3134, virtually unchanged from Tuesday’s opening levels.

Pound (GBP) Supported by Data Release

The Pound (GBP) firmed against the majority of its peers on Tuesday following the release of the British Retail Consortium's retail sales monitor.

The index, which met market expectations, rose from 0.3% to 0.8% in August.

This provided Sterling with some marginal support, along with a cautious trading conditions, which helped the Pound strengthen against more risk-sensitive peers.

Helen Dickinson OBE, Chief Executive of the British Retail Consortium, commented:
‘Sales growth picked up in August, particularly for food as people came together to host barbecue and picnic gatherings for family and friends, and for summer clothing, health & beauty products as people prepared for trips away and summer social events.’

Euro (EUR) Undermined by ECB Rate Cut Speculation

The Euro (EUR) was undermined on Tuesday amid lack of fresh economic data releases and increasing bets on an interest rate cut by the European Central Bank (ECB).

After several disappointing data releases from the Eurozone and dovish remarks from ECB officials, bets on a rate cut have increased, stymieing the single currency.

However, a decrease in market sentiment led investors to shift away from riskier assets. moving towards safer currencies. This cautious trading behaviour provided slight support to the Euro, allowing it to gain strength against more risk-sensitive counterparts.

GBP/EUR Exchange Rate Forecast: UK and Eurozone PMIs to Drive Movement

Moving forward, the primary driver of movement for the Pound Euro exchange rate as we approach Wednesday will likely be the release of the finalized services PMI for both the UK and the Eurozone for August.

The crucial services index in the UK is anticipated to demonstrate continued growth acceleration, with expectations for the index to increase from 52.5 to 53.3.

If the results align with forecasts and confirm another robust performance in August, the Pound is poised to gain ground against its counterparts in the middle of the week.

On the Euro side, the services index is similarly expected to climb from 51.9 to 53.3 during the same period, which could bolster the Euro accordingly.

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TAGS: Pound Euro Forecasts