Pound to Euro Exchange Rate News: GBP/EUR Wavers amid Lull in Data

September 9, 2024 - Written by John Cameron

STORY LINK Pound to Euro Exchange Rate News: GBP/EUR Wavers amid Lull in Data

The Pound Euro (GBP/EUR) exchange rate moved without a clear direction on Monday despite a prevailing risk-off market mood.

At the time of writing GBP/EUR was trading at €1.1841, virtually unchanged from Monday’s opening rate.

The Pound (GBP) experienced a slight decline on Monday amidst a globally cautious trading atmosphere.

The Pound's increasing sensitivity to risk influenced its exchange rates, which were impacted throughout the session by shifting market sentiments. With no significant macroeconomic announcements from the UK, investors turned their attention to recent data from KPMG and the Recruitment and Employment Confederation (REC), which showed a decrease in job vacancies across the UK.

This data suggests a rapid cooling in the UK labour market, dampening investor enthusiasm for Sterling just before the release of crucial UK employment data scheduled for Tuesday.

Jon Holt, Chief Executive and Senior Partner at KPMG in the UK, noted that the slowdown in wage growth, which has fallen to its lowest levels since March this year, could potentially bolster the case for the Bank of England (BoE) to consider further rate cuts sooner than later.

Holt remarked:

‘The news that while salaries rose last month it was at the weakest rate since March could help make the case for more rate cuts when the [Bank of England’s] Monetary Policy Committee meets to decide the future path of interest rates.’

As the market anticipates the upcoming employment figures from the UK, the cautious approach of investors mirrors the broader uncertainty prevailing in global financial markets, with the Pound particularly affected by these concerns.

The Euro (EUR) experienced fluctuations against its counterparts on Monday, influenced by the absence of significant macroeconomic updates from the Eurozone.

Investor confidence was notably subdued, following a report from the German research group Sentix, which highlighted declining sentiment due to ongoing economic challenges in Germany, the largest economy in the Eurozone.

Sentix warned against potential recessionary pressures within the Eurozone, primarily driven by Germany's continued economic slowdown and reduced industrial output.

The report from Sentix stated, ‘The Eurozone is struggling with dangerous recessionary tendencies ‘thanks to Germany’. The situation in the rest of the world is also weakening, but investors here are somewhat more optimistic in their expectations.’

Despite the overall negative market mood, the Euro managed to maintain some stability, benefiting from its status as a safe-haven currency. Investors tended to prefer the safety of the Euro over riskier assets amid growing global economic uncertainty.

Looking forwards, the Pound Euro (GBP/EUR) exchange rate will likely be shaped by the UK’s upcoming employment data from the UK. The UK labour market is experiencing shifts, with the unemployment rate expected to drop to 4.1% in July and wage growth slowing down. This deceleration in wage increases could bolster the case for the Bank of England (BoE) to contemplate further cuts in interest rates, which might may hamper GBP on Tuesday.

In the Eurozone, Germany’s latest inflation data will be in the spotlight. Analysts predict that German price pressures will settle below the European Central Bank's (ECB) target of 2%, potentially placing more downward pressure on the Euro amid a slight uptick in ECB rate cut bets.

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TAGS: Pound Euro Forecasts