Pound-Euro could stay rangebound unless German industrial data surprises, while mixed ECB commentary may add to Euro volatility.
The Pound Euro (GBP/EUR) exchange rate traded sideways on Tuesday as the common currency’s recent selloff stabilised.
At the time of writing, GBP/EUR was trading at €1.1773, marginally down on the day.
Pound to Euro (GBP/EUR): 1.179186 (+0.06%)
Euro to Dollar (EUR/USD): 1.125495 (+0.33%)
DAILY RECAP:
The Pound (GBP) lacked a clear direction on Tuesday as British economic data was thin on the ground, leaving Sterling with little impetus.
GBP exchange rates remained somewhat underpinned by more hawkish Bank of England (BoE) bets, along with hopes for closer UK-EU ties. However, while these factors kept Sterling afloat, they couldn’t provide the Pound with any additional upside.
The Euro (EUR) steadied on Tuesday, after striking multi-month lows against some peers on Monday amid fears of a French debt crisis and political uncertainty in Spain.
The common currency managed to avoid further losses as French bond markets stabilised, while the Euro also benefitted from its strong negative correlation with the US Dollar (USD), as the latter currency weakened.
Meanwhile, EUR also managed to brush off a startling slump in German factory orders in August. New data showed that orders plunged 10.6%, versus forecasts for a more modest contraction of 1%.
Near-Term GBP/EUR Forecast: Fresh German Data in Focus
Looking forward, Wednesday morning brings Germany’s latest industrial production figures. A modest recovery in output could lend EUR some support, although any upside may be limited. If the figures miss forecasts, however, the common currency may face renewed pressure.
Meanwhile, speeches from two European Central Bank (ECB) policymakers could also influence the Euro. Piero Cipollone and Boris Vujčić are considered dovish and hawkish, respectively. Could mixed comments see EUR waver?
As for the Pound, UK economic data remains thin on the ground on Wednesday, potentially leaving GBP to trade without a clear directional bias.
Our currency coverage draws on live market data, official economic releases and published bank research.
