The Pound-Euro rate could remain rangebound until the Bank of England and Eurozone GDP provide fresh direction later this week.
The Pound to Euro (GBP/EUR) exchange rate edged higher on Tuesday after recovering from a three-week low, although a lack of economic data and caution ahead of Thursday’s key events limited Sterling’s rebound.
At the time of writing, GBP/EUR was trading around €1.1695, marginally higher on the day.
DAILY RECAP:
The Pound (GBP) attempted to recover after slipping to multi-week lows against several peers at the start of the week, although the absence of fresh UK economic data limited Sterling’s upside.
The Pound had come under pressure after falling global energy prices reduced expectations that the Bank of England (BoE) would adopt a more hawkish tone at Thursday’s policy meeting.
However, Sterling appeared to enter oversold territory, allowing it to recoup some of its recent losses.
At the same time, easing energy prices helped pull UK gilt yields lower, reducing government borrowing costs and easing pressure on Prime Minister Andy Burnham as investors assessed the affordability of the government’s cost-of-living measures.
Meanwhile, the Euro (EUR) also traded in a narrow range amid a quiet Eurozone economic calendar.
External market developments also offered little direction, with the US Dollar – against which the Euro is negatively correlated – trading broadly sideways through the session.
Near-Term GBP/EUR Forecast: Pairing Muted ahead of Eventful Thursday?
Looking ahead, a quiet UK and Eurozone economic calendar on Wednesday may leave the Pound to Euro exchange rate confined to a narrow range.
Investors are also likely to avoid taking large positions ahead of Thursday’s key events, including the Bank of England’s interest rate decision and the Eurozone’s preliminary second-quarter GDP figures.
As a result, both Sterling and the Euro may struggle to establish a clear direction until fresh catalysts emerge later in the week.
Our currency coverage draws on live market data, official economic releases and published bank research.
