The Pound to Euro (GBP/EUR) exchange rate rose to a ten-month high on Wednesday, as the common currency struggled despite some upbeat German data.
At the time of writing, GBP/EUR was trading at €1.1604, having eased off an earlier high but still up on the day.
Pound to Euro (GBP/EUR): 1.1604
Euro to US Dollar (EUR/USD): 1.1380
Pound to US Dollar (GBP/USD): 1.3218
DAILY RECAP:
The Euro (EUR) weakened on Wednesday, despite some upbeat data from Germany.
The latest IFO business climate index showed that morale in the Eurozone’s largest economy rose to a three-month high in June, climbing to 85.6 from an upwardly revised 85 in May. However, as the data printed in line with expectations, EUR investors were seemingly unimpressed.
Instead, the Euro suffered from its strong negative correlation with the US Dollar (USD). The American currency continued its recent winning streak amid Federal Reserve interest rate hike bets and worries about an AI bubble.
Meanwhile, the Pound (GBP) gained ground on Wednesday, with Sterling drawing support from a calmer UK political backdrop despite an absence of domestic data.
After Prime Minister Keir Starmer stepped down on Monday, markets now appear increasingly confident that Andy Burnham will replace him without a drawn-out leadership battle.
This prospect of a smooth and rapid handover helped ease concerns among GBP investors, with the Pound benefiting from hopes that the transition will avoid the instability of a prolonged contest.
Near-Term GBP/EUR Forecast: More Upbeat German Data to Lift the Euro?
Looking forward, Thursday kicks off with some fresh German data, the GfK consumer confidence index for July. If household morale has improved in the Eurozone’s largest economy, it could give EUR exchange rates a boost.
Turning to the Pound, the only UK economic release is the latest distributive trades survey from the Confederation of British Industry (CBI), which may have a limited impact on Sterling if it shows a modest improvement but remains negative.
Instead, GBP investors may focus on speculation around who Andy Burnham could pick to be Chancellor as he prepares to enter Number 10. Any movements in the bond market as investors weigh up the candidates and what they could mean for public borrowing may influence the Pound.
