Pound-Euro could push above €1.17 if UK GDP beats expectations, while weak Eurozone industrial data may add pressure to the single currency.
The Pound to Euro (GBP/EUR) exchange rate traded sideways on Wednesday as investors waited for Thursday’s UK GDP release and fresh Eurozone industrial data.
At the time of writing, GBP/EUR was trading around €1.1705, little changed on the day and close to Monday’s two-week high.
DAILY RECAP:
The Pound (GBP) traded in a narrow range on Wednesday as the continued absence of fresh UK economic data limited movement.
With few immediate domestic catalysts, investors were reluctant to adjust their positions ahead of Thursday’s second-quarter GDP figures.
Sterling nevertheless drew some support from Bank of England (BoE) interest rate hike expectations, helping the currency hold firm.
The recent rise in oil prices has reinforced expectations that the BoE may still tighten monetary policy later this year.
Meanwhile, the Euro (EUR) also struggled to find a clear direction as competing factors pulled the single currency in different directions.
Germany’s final consumer price index for July confirmed inflation in the Eurozone’s largest economy rose from 2.3% to 2.8%.
However, as the figure matched the preliminary estimate, its impact on the Euro was limited.
At the same time, EUR faced some pressure from its strong inverse relationship with the US Dollar, which edged higher during the session.
Near-Term GBP/EUR Forecast: UK GDP to Lift the Pound?
Looking ahead, Thursday’s UK GDP figures are expected to provide the next major catalyst for the Pound to Euro exchange rate.
Markets expect the UK economy to have slowed but still expanded at a healthy pace, with quarterly growth forecast at 0.4% in the second quarter, down from 0.6% in the first.
A reading in line with expectations could provide Sterling with modest support.
A stronger-than-expected GDP print could see the Pound push higher, while a weaker reading may weigh on GBP.
Meanwhile, the Eurozone’s latest industrial production figures could influence the single currency.
Markets expect output to have stalled in June following a 0.2% contraction in May. If forecasts prove accurate, the Euro may struggle to find meaningful support.
Our currency coverage draws on live market data, official economic releases and published bank research.
