Pound Euro Exchange Rate News: GBP/EUR Directionless in Subdued Market Mood

September 9, 2022 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Directionless in Subdued Market Mood

GBP/EUR Exchange Rate Sluggish Amid Muted Market Mood

The Pound to Euro (GBP/EUR) exchange rate was sluggish on Friday as the passing of Queen Elizabeth and the Eurozone’s upcoming emergency energy meeting subdued trading.

At time of writing the GBP/EUR exchange rate traded at around €1.1510, which barely changed from Friday’s opening levels.

Pound (GBP) Volatile in as Investors in Conflict over Energy Package

The Pound was volatile on Friday investors digested Liz Truss’s energy package. Whilst trading with the Euro was directionless, the Pound was up against some peers and down against others.

Earlier this week Liz Truss became prime minister, whilst response across markets was positive on Tuesday, GBP subsequently dropped as investors began to question some aspects of Truss’s energy support package.

The package, which is estimated to cost upwards of £130bn, caused economists to adjust inflation and growth expectations, with hopes the support package will lead to a shallower recession than first feared.

Although, investors still seem to be wary of the cost of the package as they worry it could impact the cost of borrowing. They were also concerned the passing of Queen Elizabeth, and the subsequent suspension of parliament might impact the timeline of the package’s delivery.

The death of Queen Elizabeth impacted markets Friday, subduing trade in Sterling. Industrial strikes have been postponed as the country enters a ten-day period for the monarch.

Euro (EUR) Muted as Investors Pull Back Ahead of Emergency Energy Meeting

The Euro was trading on the back foot on Friday ahead of the EU’s emergency energy meeting.

This meeting follows the European Central Bank (ECB) increasing interest rates by a record 75bps to tackle rising inflation.

Energy prices spiked again this week following’s Russia closure of the Nord stream 1 pipeline in response to EU sanctions.

During the meeting European Commission president Ursula von der Leyen proposed five key ideas to tackle the energy crisis.

These ideas included introducing measures to reduce peak demands when electricity is most expensive; limiting revenue from companies creating low-cost energy; introducing a windfall tax on fossil fuels; financial support for energy suppliers and finally a price cap on Russian gas.

EUR exchange rates remain muted as investors await the outcome of the meeting.

However, the suggestions alone seem to be easing economic fears as gas prices became to retreat as the meeting took place.

Some gas prices have dropped by as much as 7%. Despite this gas prices were still well about post-war levels.

GBP/EUR Exchange Rate Forecast: Euro to Pick Up as Emergency Plans are Debated?

The GBP/EUR exchange rate is likely to remain volatile as more is learnt about Europe’s measure to tackle their energy crisis.

If the plans are well received, then the Euro could stabilise against its peers. However, if investors think the plans are too unobtainable then the Euro could continue to sink.

With no significant UK data to be released until Monday, the Pound will likely continue to trade on domestic headlines surrounding Truss’s energy package.

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TAGS: Euro Pound Forecasts