The Pound to Euro (GBP/EUR) exchange rate edged higher on Wednesday, touching a three-week high as markets digested the UK’s latest inflation figures and their implications for interest rate expectations.
Pound to Euro (GBP/EUR): 1.15346 (+0.27%)
Pound to Dollar (GBP/USD): 1.35076 (-0.02%)
Euro to Dollar (EUR/USD): 1.17105 (-0.29%)
DAILY RECAP:
The Pound (GBP) found modest support following the release of the UK’s latest consumer price index.
Headline inflation rose from 3% to 3.3% in March, in line with expectations, while core inflation eased slightly.
However, underlying details offered some support.
Service-sector inflation, closely monitored by the Bank of England, accelerated from 4.3% to 4.5%, signalling persistent domestic price pressures.
While the data did not significantly alter expectations for monetary policy, it helped keep the prospect of a rate hike later this year on the table, underpinning Pound Sterling.
Meanwhile, the Euro (EUR) lacked a clear driver.
In the absence of fresh Eurozone data, the single currency struggled to maintain its footing against the Pound.
A softer US Dollar, with which the Euro shares a negative correlation, provided some limited support, but not enough to offset Sterling’s gains.
GBP/EUR Forecast: April PMIs in Focus
Looking ahead, attention turns to the preliminary PMI releases for April.
The Eurozone’s private sector activity is expected to slow to near stagnation, which could weigh on EUR if confirmed.
The UK’s own PMI figures are also forecast to show weakening momentum, particularly in the services sector, which may limit Sterling’s upside.
However, markets will be watching closely for any signs of persistent inflationary pressures within the surveys.
Evidence of rising input costs could help cushion both currencies, even if growth indicators soften.
