Th Pound-Euro could remain under pressure if ECB minutes reinforce September rate hike expectations, while Sterling lacks fresh domestic support.
The Pound Euro (GBP/EUR) exchange rate faltered on Wednesday as markets increased bets on a European Central Bank (ECB) interest rate hike in September.
At the time of writing, GBP/EUR was trading at €1.1675, down marginally on the day.
DAILY RECAP:
The Euro (EUR) firmed on Wednesday as ECB rate hike bets boosted the currency.
EUR investors reacted positively to comments from influential ECB policymaker Isabel Schnabel, who said in an interview with Bloomberg News that interest rates must rise further amid the ongoing US-Iran war and the upside inflation risks posed by the strong Eurozone economy.
Her remarks boosted bets that the ECB will tighten monetary policy again next month, which in turn lifted the Euro.
Meanwhile, the Pound (GBP) lacked support on Wednesday amid concerns about the rising cost of living in the UK.
News that the energy price cap will rise again in October fuelled concerns about how the squeeze on household incomes will impact the British economy.
It also raised questions about whether the government will step in to support struggling households, and if so, how these measures will be funded.
Near-Term GBP/EUR Forecast: ECB Minutes to Boost the Euro?
Looking forward, Thursday’s session kicks off with Germany’s latest consumer confidence index. Another month of pessimism in September could weigh on the Euro.
Attention then turns to the minutes from the European Central Bank’s last monetary policy meeting. If policymakers at the bank struck a hawkish tone last month, the single currency could strengthen.
Meanwhile, market-moving UK data is thin on the ground on Thursday. As a result, movement in the Pound may be limited.
GBP investors may turn their attention to domestic news, with political headlines and concerns about the rising cost of living potentially impacting Sterling.
Our currency coverage draws on live market data, official economic releases and published bank research.
