Pound US Dollar (GBP/USD) Exchange Rate Rangebound amid Bleak UK Headlines
The Pound Euro (GBP/EUR) exchange rate is trading narrowly this morning, as a lack of economic data for either currency prevents clear direction.
At the time of writing, GBP/EUR is trading at around €1.1247, showing little movement from the morning’s opening rates.
Pound (GBP) to Rally on GDP Recovery?
The Pound (GBP) could see strength as the week comes draws to a close, due to January’s GDP data release.
Currently, the UK’s economy is expected to have grown by 0.1% on a monthly basis. If this prints as forecast, GBP could strengthen as the release may go some way to further alleviate recession anxieties.
Furthermore, domestic optimism could aid Sterling in the short term. Recently, negotiations between unions and ministers have shown signs of resolution with the RMT calling off strikes scheduled for the near-future.
If further news pointing to amicable resolutions crops up over the next few days, GBP could see some further support.
However, the continued perception of a divergence between the Bank of England (BoE) and other central banks could weigh on Sterling.
Impactful US Labour data is due to print tomorrow, which may reinforce the US’ tight labour market. As such, this would bolster the case for further rate hikes from the Federal Reserve. If this occurs, the market mood is likely to sour, which would weigh heavily on GBP.
Euro (EUR) to Remain Muted amid Lack of Data?
The Euro (EUR) may remain subdued over the rest of today’s trade, as a lack of macroeconomic data leaves the single currency open to external factors.
Recent developments in the Ukraine-Russia war may continue to limit EUR, with the fight for Bakhmut continuing. While the Ukrainian army has managed to repel the onslaught, any news of the tide turning could harm the Euro.
The data calendar for the Euro will remain thin tomorrow too. As such, investor focus may remain on the Ukraine-Russia war.
However, the final readings for Germany’s CPI data for February are due tomorrow. If they deviate significantly from the preliminary readings, it could sway the single currency.
Ultimately, European Central Bank (ECB) rate hike bets are likely to underpin the common currency. ECB President Christine Lagarde is scheduled to speak tomorrow afternoon, and if she continues to reiterate the bank’s hawkish stance, EUR may rise.
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