August 18, 2021 - Written by John Cameron
STORY LINK GBP/EUR Exchange Rate Forecast: Pound Euro Exchange Rate Mixed on Inflation Rate Data
The Pound Euro (GBP/EUR) exchange rate has been trading in a mixed range since markets opened this morning as inflation rate figures from both the UK and Eurozone caused volatility in the pairing.
The GBP/EUR pairing are currently trading around the 1.1735 level as both currencies look towards any further coronavirus developments to drive movement in the pairing heading into the afternoon.
Pound (GBP) Wobbles on UK Inflation Rate Figures
The Pound wobbled against the Euro this morning following the release of the latest inflation rate figures from the UK for July.
Inflation softened to 2% on the year, missing forecasts of 2.3% and falling for the first time since February of this year.
Martin Beck, senior economic advisor to the EY ITEM Club, commented on the latest inflation figures, remaining optimistic moving forward:
‘CPI inflation slowed from 2.5% in June to 2.0% in July. The ONS attributed almost half of the slowdown to strong base effects caused by a spike in the price of services last year when the economy reopened after the first lockdown.’
‘July’s data is likely to represent brief respite from the upward movement in inflation rates. August will see base effects push annual inflation up again, with last August having seen both the VAT cut for the hospitality sector and the Eat Out to Help Out scheme. Indeed, it could be possible that the annual CPI rate will rise by as much as one percentage point between July and August.’
Euro (EUR) Mixed on Eurozone Inflation Rate Data
The Euro has been rangebound for much of the morning following the release of Eurozone inflation rate figures.
Eurozone inflation picked up during July coming in at 2.2%, above the European Central Bank’s (ECB) target and at its highest rate in almost three years.
The single currency seems to be struggling however as renewed fears over the coronavirus pandemic does little to support the appeal of the Euro.
Euro investors will be looking towards this evenings Federal Open Market Committee (FOMC) meeting minutes from the US to drive movement in the currency overnight.
Pound Euro Exchange Rate Outlook: FOMC Meeting Minutes in Focus
An absence of economic data from both the UK and Eurozone will see investors look to see the market reaction towards the FOMC meeting minutes which are to be released this evening.
The GBP/EUR pairing will continue to be driven by any further coronavirus developments during tomorrow’s European session.
Looking further ahead, Friday’s UK retail sales will be eyed by investors heading into the weekend.
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TAGS: Pound Euro Forecasts