GBP/EUR Exchange Rate Outlook: Pound Flat Following BoE Inflation Concerns

November 28, 2024 - Written by John Cameron

STORY LINK GBP/EUR Exchange Rate Outlook: Pound Flat Following BoE Inflation Concerns

The Pound to Euro (GBP/EUR) exchange rate traded within a tight range on Wednesday as investors reacted to comments by Bank of England (BoE) Deputy Governor Clare Lombardelli.

The Pound (GBP) remained steady on Wednesday, supported by comments from BoE policymaker Clare Lombardelli regarding inflation risks.

In an interview with the Financial Times, Lombardelli highlighted her concerns about persistent inflationary pressures in the UK economy, particularly in the services sector, where price growth and wage increases remain elevated.

Although she acknowledged that inflation risks were less severe than earlier this year, her remarks signalled the BoE’s continued vigilance, which further undermined any lingering expectations for a December rate cut.

These comments offered some stability to Sterling despite ongoing concerns over the broader economic outlook for the UK.

The Euro (EUR) traded sideways on Wednesday as markets remained cautious ahead of upcoming German and Eurozone inflation reports.

Germany’s consumer price index (CPI) is due on Thursday, with the Eurozone CPI following on Friday.

Both are expected to show inflation ticking higher, with Germany’s inflation forecast to rise from 2% to 2.2% and the Eurozone’s from 2% to 2.4%.

While this data is unlikely to alter expectations for a December rate cut from the European Central Bank (ECB), it may reduce the likelihood of further easing in 2025, offering some modest support to the Euro.

Pound to Euro Exchange Rate Forecast: Economic Sentiment in the Eurozone to Pressure the EUR?

Looking to the latter half of the week, the GBP/EUR exchange rate may be influenced by the Eurozone’s upcoming economic sentiment index, in addition to inflation data.

The sentiment index is expected to show a decline, reflecting growing concerns about the Eurozone’s economic trajectory.

Such a drop in confidence could weigh on the Euro, limiting any gains stemming from the inflation figures.

Meanwhile, with little significant UK data on the horizon, the Pound may remain sensitive to broader market risk sentiment. If geopolitical risks or global trade concerns continue to dominate headlines, Sterling could face additional pressure.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts