GBP/EUR Exchange Rate Forecast: Eurozone Interest Rate Decision to Drive Movement

December 12, 2024 - Written by James Fuller

STORY LINK GBP/EUR Exchange Rate Forecast: Eurozone Interest Rate Decision to Drive Movement

The Pound Euro (GBP/EUR) exchange rate traded in a narrow range on Wednesday amid a lull in data releases from the UK and the Eurozone.

On Wednesday, the Euro (EUR) failed to capture much investor interest and remained stuck in a tight trading range against most of its major peers.

With no significant economic data from the Eurozone, investors were cautious about making bold moves on the common currency ahead of the European Central Bank's (ECB) upcoming interest rate decision, scheduled for release on Thursday.

Given the widespread expectation that the ECB will implement another 25-basis point interest rate cut, the Euro found it difficult to attract buyers during mid-week trading.

The Pound (GBP) faced a similar challenge in attracting investor interest mid-week, as the absence of key UK data releases left Sterling without a clear direction once more.

Adding to the currency's woes was the prevailing market sentiment.

Given its growing sensitivity to risk, GBP exchange rates were further weakened by the cautious market mood on Wednesday.

Looking ahead to Thursday, the primary factor influencing the Pound Euro exchange rate will undoubtably be the publication of the European Central Bank’s latest interest rate decision.

This highly anticipated announcement is expected to have a significant impact on the single currency, as investors closely scrutinize any signals from the central bank.

If the ECB follows through with the widely expected 25-basis point interest rate cut, the Euro is likely to experience a notable decline.

Turning to the Pound, the UK economic calendar remains devoid of significant data releases on Thursday.

This lack of fresh economic indicators means that Sterling is likely to trade without a clear direction once again.

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TAGS: Pound Euro Forecasts