Pound Euro Exchange Rate News: GBP/EUR Rangebound in Absence of Data

October 2, 2024 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Rangebound in Absence of Data

At the time of writing, GBP/EUR traded at around €1.2004, virtually the same as its opening level.

The Pound (GBP) was muted on Wednesday as a lack of UK economic data left Sterling struggling to find a clear direction.

As a result, the increasingly risk-sensitive British currency also faced some pressure due to a prevailing risk-off market mood.

Investors were anxious about the escalating conflict in the Middle East, after Iran launched a missile attack on Israel. This kept a lid on GBP.

Euro (EUR) Subdued on ECB Rate Cut Bets

Meanwhile, the Euro (EUR) was also muted on Wednesday in the wake of Tuesday’s Eurozone consumer price index.

The CPI figures showed that inflation cooled more than forecast in September, dipping below the European Central Bank’s (ECB) target of 2% and fuelling expectations for another interest rate cut later this month.

This continued to hang over the Euro at the start of Wednesday’s session, keeping the single currency subdued.

However, the Euro was spared losses as the Eurozone's August unemployment rate held at a record low of 6.4%.

GBP/EUR Exchange Rate Forecast: PMIs to See the Pound Strengthen?

Looking forward, the finalised services PMIs for both the Eurozone and the UK could drive movement in the GBP/EUR exchange rate on Thursday.

The preliminary results for both the Eurozone and UK PMIs came in below expectations, showing slowdowns in activity. However, Eurozone activity slowed at a faster pace to hit a near standstill in September.

If the final results match the preliminary forecasts, both GBP and EUR could come under pressure, although the Pound may be the stronger of the two.

The Eurozone’s latest producer price index could potentially exacerbate the Euro’s losses against the Pound. Producer price growth is expected to have slowed from 0.8% in July to 0.3% in August, indicating easing inflationary pressures. This may fuel ECB rate cut bets and undermine EUR.

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TAGS: Forecasts