Pound Euro (GBP/EUR) Exchange Rate Muted ahead of Eurozone Inflation

December 1, 2024 - Written by Frank Davies

STORY LINK Pound Euro (GBP/EUR) Exchange Rate Muted ahead of Eurozone Inflation

The Pound Euro (GBP/EUR) exchange rate wavered sideways on Thursday as mixed factors and a muted mood ahead of the Eurozone inflation figures subdued the pairing.

The Pound (GBP) traded flat on Thursday due to an absence of significant UK economic data.

The sole release was a mid-tier consumer confidence report from the British Retail Consortium (BRC), revealing a slightly gloomier sentiment among UK consumers in November. The survey score dropped from -17 in October to -19 this month, primarily due to worries about the UK’s economic trajectory, showing a modest deterioration in overall morale.

Despite the downbeat survey, a broadly positive market sentiment lent support to the increasingly risk-sensitive Pound, helping it hold steady against its safe-haven rivals.

The Euro (EUR) saw limited movement on Thursday despite upbeat data from the Eurozone.

The bloc’s economic sentiment indicator surprised markets by improving in November, defying forecasts of a decline to a one-year low.

However, gains for the Euro were capped by a buoyant market mood, which weighed on the safer currency, and the currency’s inverse relationship with a strengthening US Dollar (USD).

Additionally, EUR investors remained cautious, holding back on significant moves ahead of the Eurozone consumer price index release on Friday.

Pound Euro Exchange Rate Forecast: Could Rising Inflation See the Euro Strengthen?

Looking ahead, Friday’s focus will be on the preliminary Eurozone consumer price index for November.

Economists anticipate that headline inflation in the bloc increased this month, rising from 2% to 2.3%. Core inflation is also expected to edge up slightly, from 2.7% to 2.8%.

Should the CPI data align with forecasts, it could reduce market expectations of further European Central Bank (ECB) interest rate cuts, likely providing a boost to the Euro.

However, any unexpected results may trigger sharper market reactions. A lower-than-expected reading could weigh on the Euro, while stronger-than-forecast inflation figures might drive the currency higher.

In contrast, a lack of impactful UK economic data may leave the Pound relatively subdued.

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TAGS: Pound Euro Forecasts