Pound Euro (GBP/EUR) Exchange Rate Trades Narrowly after Eurozone Inflation Data
The Pound Euro (GBP/EUR) exchange rate fluctuated this morning ahead of the latest Eurozone inflation data. The pairing has traded in a narrow range following the data. Eurozone headline inflation fell by more-than-forecast, but core inflation ticked higher. This is likely keeping bets on further European Central Bank (ECB) rate hikes bolstered and preventing significant gains for GBP/EUR.
The exchange rate could be supported by the final reading of fourth quarter UK GDP today. The figures were revised higher to indicate a 0.1% expansion in the UK’s economy in the final quarter of last year. Markets are taking the data as an indication that the UK dodged a recession in 2022.
Will Upbeat Data for UK Services Sector Boost Pound (GBP)?
The Pound (GBP) will see little significant data over the coming week. The most notable release is likely to be the final reading of March’s private sector PMIs.
Monday’s output data for the UK’s manufacturing sector is set to confirm a decline deeper into negative territory. The figure may weigh on Sterling.
On the other hand, the Pound could see a boost from March’s final reading for the UK’s dominant services sector on Wednesday. Output is forecast to remain in positive territory amid signs of resilience amid the UK’s cost-of-living crisis.
Movement in Sterling may also be inspired by any shifts in market sentiment regarding the Bank of England’s (BoE) forward path. The Pound could find fresh upward impetus if bets on a rate hike from the BoE at their next meeting continue to grow.
Will PPI Slip Deter Euro (EUR) Investors from Betting on ECB Hikes?
Looking to the week ahead, the Euro’s (EUR) is similarly bereft of significant data. The final reading of March’s PMIs for the Eurozone are likely to be the only major releases for the single currency.
EUR could slip on Monday if the final reading of March’s manufacturing sector confirms a downturn in output.
The final reading of March’s service sector PMI on Wednesday may help to curb any losses, however. The figures are expected to confirm a third consecutive month of expansion in the sector. Some less significant data releases could affect ECB rate hike bets next week. On Tuesday, a forecast cooldown in February’s producer price index (PPI) could dampen rate hike bets and pull the Euro lower.
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