GBP to EUR Exchange Rate Outlook: Pound-Euro Ticks Up following UK Inflation

November 21, 2024 - Written by John Cameron

STORY LINK GBP to EUR Exchange Rate Outlook: Pound-Euro Ticks Up following UK Inflation

The Pound Euro (GBP/EUR) exchange rate edged up on Wednesday following the publication of the UK’s latest consumer price index (CPI).

At the time of writing, the GBP/EUR was trading at around €1.2007, up roughly 0.3% from Wednesday’s opening levels.

The Pound (GBP) experienced a modest rally against most of its counterparts on Wednesday, following the release of the UK's latest inflation figures.

The country's most recent inflation index, which measures price changes in October, exceeded expectations upon its release mid-week which buoyed sentiment towards Sterling.

Headline inflation climbed from 1.7% to 2.3%, surpassing the more conservative 2.2% forecast. Meanwhile, core inflation inched up from 3.2% to 3.3%, defying predictions that it would hold steady at 3.2%.

As a result, market expectations for a Bank of England (BoE) interest rate cut in December significantly diminished.

The probability of the central bank maintaining its current rate next month hovered around 100%, which further strengthened GBP exchange rates.

The Euro (EUR) faced a challenging trading environment on Wednesday, losing ground against various peers due to a scarcity of economic data which left the single currency adrift.

Adding to the Euro's woes was a resurgent US Dollar (USD), which gained traction following a period of negative adjustment.

Geopolitical concerns, particularly the ongoing tensions between Russia and Ukraine, spurred investors to seek refuge in the US Dollar, consequently putting the Euro at a disadvantage.

Looking ahead to Thursday, the key catalyst for movement in the Pound Euro exchange rate is expected to come from economic data releases within the Eurozone.

In the afternoon, the Bloc will unveil its latest consumer confidence index for the current month.

If the data indicates persistent below-average consumer sentiment, EUR exchange rates could face downward pressure.

Additionally, several European Central Bank (ECB) policymakers are scheduled to deliver speeches on Thursday.

Should any of these officials adopt a dovish tone, it could introduce further volatility into the Euro.

As for the Pound, the only notable data release will be the latest CBI industrial trends orders, a mid-tier UK dataset, with a negative reading potentially weigh on Sterling as the week comes to a close.

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TAGS: Pound Euro Forecasts