The GBP/EUR exchange rate stayed in a narrow range this morning after Germany released its latest ZEW economic sentiment index. Currently, the GBP/EUR rate trades around €1.1897, showing little change from this morning’s opening rate.
The pound (GBP) remains steady against most peers as markets await the UK’s latest consumer price index (CPI), set for release on Wednesday. Analysts expect the index to show headline inflation at the Bank of England’s (BoE) 2% target, while core inflation may cool from 3.5% to 3.4%.
If UK inflation cools, BoE rate cut speculation for August could intensify, weakening the GBP mid-week. The UK’s latest jobs report, due on Thursday, follows this. Analysts expect unemployment to hold at 4.4% for May, but predict slower wage growth, which could pressure the pound further by reinforcing rate cut expectations.
Meanwhile, the euro (EUR) struggles this morning after Germany’s ZEW economic sentiment survey for July showed the index falling from 47.5 to 41.8, missing expectations for a drop to 42.5. This decline is due to political uncertainties in France and unclear future ECB monetary policies.
The ECB meets later this week to decide on its latest interest rate policy. No changes are expected after their recent rate cut decision. However, markets are keenly watching for any guidance from ECB officials on further rate cuts. A dovish outlook could cause EUR exchange rates to slump towards the end of the week.
Traders must monitor these upcoming economic data releases and central bank decisions, as they will likely influence the volatility and direction of the GBP/EUR exchange rate in the coming days.
Additionally, analysts are closely watching the broader economic indicators from both the UK and Eurozone. Any unexpected data could further impact the GBP/EUR exchange rate, adding another layer of complexity for traders and investors.
