Pound to Euro Hits Two-Week Best as Dollar Pressures Euro

– Written by


David Woodsmith

STORY LINK Pound to Euro Hits Two-Week Best as Dollar Pressures Euro

The Pound Euro (GBP/EUR) exchange rate advanced on Monday, reaching a two-week high as the stronger US Dollar (USD) put pressure on the single currency.

At the time of writing, GBP/EUR was trading at €1.1681, representing a 0.2% gain on the day.

The Euro (EUR) weakened on Monday, with the single currency vulnerable to gains in the US Dollar due to their strong inverse relationship.

The US Dollar strengthened ahead of the Federal Reserve’s interest rate decision later in the week. The US central bank is widely expected to increase rates from 3.75% to 4%, providing strong support for the ‘Greenback’.

With little in the way of Eurozone economic data to bolster the single currency, the Euro struggled to find a foothold and remained exposed to losses.

The Pound (GBP) struggled to establish a firm direction on Monday, with Sterling investors holding back ahead of several potentially market-moving events.

There was little UK data to influence GBP at the start of the week, but the economic calendar is set to become considerably busier in the days ahead.

The latest UK labour market figures, consumer price index, Bank of England (BoE) interest rate decision and retail sales data are all due to be released.

With so much capable of shifting the outlook for Sterling, GBP investors appeared reluctant to take sizeable positions on Monday.

Near-Term GBP/EUR Forecast: Sterling Faces Test from UK Jobs Data

Tuesday brings the latest UK employment figures into focus, giving markets their first major test of Sterling’s resilience this week.

British unemployment is expected to have edged up from 4.9% to 5% in the three months to July, while wage growth including bonuses is forecast to have slowed.

Evidence of further weakness in the UK labour market could drag on the Pound, particularly with the Bank of England’s interest rate decision looming on Thursday.

For the Euro, meanwhile, Germany’s latest ZEW economic sentiment index could offer some support on Tuesday.

Sentiment in the Eurozone’s largest economy is expected to have strengthened for a fifth consecutive month in September, reaching its highest level in seven months.

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TAGS: Pound Euro Forecasts