Pound Euro Exchange Rate Outlook: GBP/EUR Rangebound amid UK Budget Rumours

October 10, 2024 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Outlook: GBP/EUR Rangebound amid UK Budget Rumours

The Pound Euro (GBP/EUR) exchange rate fluctuated on Wednesday as speculation around the UK’s Autumn Budget was met with mixed feelings.

At the time of writing, GBP/EUR wobbled around €1.1934, virtually unchanged from its opening level.

The British Pound (GBP) experienced mixed trade on Wednesday, as an absence of UK data led investors to focus on the upcoming Autumn Budget.

Market participants have been apprehensive about the budget, set to be revealed later this month, amid expectations of tax increases and spending reductions.

However, recent reports suggest that Chancellor Rachel Reeves will revise the government's fiscal rules, enabling billions more to be borrowed for infrastructure investment.

While this raised concerns about potentially unsustainable debt, it also fuelled optimism that the budget will prioritise economic growth. This blend of anticipation and uncertainty caused the Pound to fluctuate throughout Wednesday's trading session.

The Euro (EUR) found initial support on Wednesday following the release of stronger-than-expected German trade figures.

Data revealed that the Eurozone's largest economy saw its trade surplus expand more than anticipated in August, with export growth surprisingly holding in positive territory.

However, the Euro's gains were capped by market speculation surrounding potential interest rate cuts by the European Central Bank (ECB), which weighed on the currency and limited its upward movement.

Looking forward to Thursday, the spotlight is expected to be on the minutes from the European Central Bank's September policy meeting.

Markets widely anticipate that the ECB will proceed with two additional interest rate cuts in October and December, given the recent signs of economic weakness in the Eurozone. If the meeting minutes reinforce these expectations, the Euro could face downward pressure.

Meanwhile, UK data remains scarce until Friday, when the latest British GDP figures are scheduled for release. Could a forecasted rebound in UK economic growth for August provide a boost to the Pound as the week comes to a close?

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TAGS: Pound Euro Forecasts