Pound to Euro Exchange Rate Retakes 1.21

December 18, 2024 - Written by Frank Davies

STORY LINK Pound to Euro Exchange Rate Retakes 1.21

The Pound Euro (GBP/EUR) exchange rate drifted higher on Tuesday following the release of the UK’s latest jobs data.

On Tuesday, the Pound (GBP) saw gains against most of its major counterparts following the release of the UK's latest employment figures.

The unemployment rate for the three months to October matched market expectations, holding steady at 4.3%.

Notably, the average earnings index (excluding bonuses) surpassed forecasts, increasing from 4.9% to 5.2%, which was higher than the anticipated 5% rise.

This uptick in wage growth helped to reduce expectations of an interest rate cut by the Bank of England (BoE), bolstering Sterling's performance during the European trading session.

On Tuesday, the Euro (EUR) experienced a broad trading range, declining against several major currencies while holding its ground against others.

This volatility followed the release of two significant economic indicators from Germany, the Eurozone’s largest economy.

The Ifo business climate index for Germany fell short of market expectations, reaching its lowest level since May 2020, which put downward pressure on the Euro.

On a more positive note, Germany’s Zew economic sentiment index surpassed expectations, climbing to a four-month high, and helped to limit some of the Euro’s losses.

GBP/EUR Exchange Rate Forecast: CPI Data to Drive Movement

Looking ahead to Wednesday, the main factor influencing the Pound Euro exchange rate will likely be the release of the latest inflation figures from both the UK and the Eurozone.

In the UK, the November consumer price index (CPI) is anticipated to show an increase in both headline and core inflation.

If the data aligns with these expectations, it could further bolster the Pound, potentially strengthening GBP exchange rates as it continues to dampen the likelihood of interest rate cuts by the Bank of England.

On the Euro front, the finalised November CPI data for the Eurozone is expected to indicate a slight rise in headline inflation, with core inflation remaining unchanged.

Should these projections hold true, the Euro might also receive some modest support as the European session kicks off on Wednesday.

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TAGS: Pound Euro Forecasts