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Pound Euro Exchange Rate News: GBP/EUR Muted as UK Cost of Living Takes Focus

April 26, 2022 - Written by John Cameron

GBP/EUR Flat Amid UK’s Cost of Living Crisis

The Pound Euro (GBP/EUR) exchange rate is trading in a narrow today amid an absence of economic data for both the UK and the Eurozone. As a result, the UK’s cost of living crisis and political landscape are dominating GBP appeal, whilst EUR is weighed on by the Russia-Ukraine war.

At the time of writing, the GBP/EUR exchange rate is trading at approximately €1.1894, with minimal movement from today’s opening levels.

Pound (GBP) Subdued as UK Cost of Living Crisis Takes Limelight

The Pound (GBP) is rangebound against the Euro (EUR) today due to a lack of UK economic data.

In turn, the UK’s cost of living crisis is back in the limelight and is preventing Sterling from making any meaningful progress.

British household incomes are being squeezed by a rise in energy bills, national insurance and council tax, as well as soaring inflation.

GBP investors fear the cost of living crisis leaves the UK at risk of slipping into a recession over the summer amid a notable drop in consumer spending.

The Bank of England (BoE) has also repeatedly warned about the price shock facing consumers this year and the bank is all too aware that tightening its monetary policy too aggressively could pile even more pressure on households.

Sterling sentiment is also being suppressed by UK political uncertainty as the ‘Partygate’ scandal begins to draw headlines once more.

Johnson has been accused of misleading parliament having been fined by the police for being in breach of lockdown rules, despite previously stating ‘all rules were followed’ throughout 2020.

As a result, many MP’s – both Conservatives and the opposition – have requested the Privilege Committee investigate the PM’s conduct surrounding the matter.

Should Johnson be found guilty of misleading the house, he will be expected to resign from his position in accordance with the ministerial code. An outcome which is unnerving GBP investors.

Euro (EUR) Dips Slightly amid Ukraine Concerns

The Euro (EUR) is slightly down against the Pound (GBP) today as an absence of Eurozone economic data leaves EUR exchange rates vulnerable to developments in Ukraine.

The Eurozone economy’s sensitivity to the conflict sees the single currency struggle as Russia’s offensive in the east of the country continues to intensify.

Russian Foreign Minister Sergei Lavrov has welcomed UN Secretary General Antonio Guterres today with hopes of reopening channels for discussion.

Guterres has highlighted the need for a ceasefire ‘as soon as possible’ to ease human suffering.

According to Lavrov, Moscow ‘appreciate[s] your (Europe’s) desire to have another round of talks at this hard time.’

Moreover, Guterres is scheduled to meet with Vladimir Putin later today. Should the meeting be successful in reopening diplomatic channels, it may support EUR exchange rates.

GBP/EUR Exchange Rate Forecast: Will BoE Governor Bailey Strike a Dovish Tone?

Looking ahead, the Pound Euro exchange rate is likely to be influenced by a speech from Bank of England (BoE) Governor Andrew Bailey.

Bailey is set to speak on Thursday. If he seems reluctant to raise interest rates at the next policy meeting, it may place pressure on Sterling.

On the other hand, the single currency may be dented by the publication of Germany’s latest consumer confidence figures tomorrow. May’s index is predicted to slip from -15.5 to -16.

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