Pound to Euro Rate Forecast: GBP/EUR Dented following Eurozone PMI

November 4, 2024 - Written by John Cameron

STORY LINK Pound to Euro Rate Forecast: GBP/EUR Dented following Eurozone PMI

The Pound Euro (GBP/EUR) exchange rate lost ground on Monday following the publication of the Eurozone’s latest PMI data

At the time of writing, the GBP/EUR was trading at around €1.1892, down roughly 0.2% from Monday’s opening levels.

The Euro (EUR) managed to achieve moderate gains against most currencies on Monday, buoyed in part by the Eurozone's recent manufacturing PMI data.

Although October's final index remained below 50, indicating contraction, it surpassed market forecasts by rising from 45.0 to 46.0, beating the anticipated 45.9.

However, the main driver of the Euro's rise was not the Bloc’s positive data release, but rather a weakening US dollar (USD), given the inverse correlation between the Euro and the US currency.

As the US election begins on Tuesday, coupled with the Federal Reserve's upcoming interest rate decision on Thursday, markets seemed reluctant to bet on the ‘Greenback’, thereby bolstering EUR exchanges rates at the start of the week.

The Pound (GBP) managed to hold steady against the majority of its peers on Monday despite the absence of any domestic economic data releases.

Despite the absence of significant economic catalysts, GBP exchange rates held steady, quietly underpinned by the previous week's decrease in anticipation for Bank of England (BoE) interest rate reductions.

Following the UK Chancellor's late-week Autumn Budget reveal, optimism that the budget could boost inflation and consequently slow monetary easing has resulted in fewer bets on BoE rate cuts.

Combined with a cautiously positive market mood, these elements offered the risk-sensitive currency some modest backing on Monday, even with the scarcity of domestic data releases.

In the coming day, the primary catalyst for movement in the Pound Euro exchange rate is anticipated to be the release of crucial UK economic data.

The UK will unveil its final services PMI for October, which may put pressure on GBP exchange rates at the beginning of Tuesday's trading session if the data indicates a slowdown in the nation's vital services sector.

Turning to the Euro, Tuesday's most notable event will be a speech by European Central Bank (ECB) President Christine Lagarde.

Lagarde's address has the potential to spark volatility in the single currency, particularly if she adopts a dovish tone regarding the future trajectory of monetary policy.

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TAGS: Pound Euro Forecasts