Pound-Euro could push back above 1.17 if UK jobs data beats forecasts, although improving German sentiment may help keep Euro gains in check.
The Pound to Euro (GBP/EUR) exchange rate traded sideways on Monday, as investors braced for a glut of high-impact data releasing later in the week.
At the time of writing, the GBP/EUR exchange rate was trading at around €1.1684. Virtually unchanged from the start of Monday’s session.
DAILY RECAP:
The Pound (GBP) traded in a relatively narrow range on Monday as investors largely held their positions ahead of a series of potentially market-moving UK economic releases later in the week.
Upcoming releases of note include the release of the UK’s latest jobs and inflation figures in the first half of the week, which will be followed by retail sales and PMI data at the end of the session.
A particular focus is likely to be placed on the UK’s employment and inflation releases as they are most likely to shape Bank of England (BoE) interest rate expectations for the coming months.
The data deluge could underpin Sterling this week if signs of a more resilient UK economy are seen as encouraging the BoE to tighten monetary policy later in the year.
The Euro (EUR) traded with modest support on Monday, with the single currency benefiting from its inverse trade relationship with the US Dollar (USD).
USD exchange rates saw broad-based weakness on Monday as investors continued to unwind expectations for further Federal Reserve’s tightening.
The Euro was also supported by falling energy prices, as natural gas prices fell to their lowest levels since May, relieving pressure on the Eurozone economy.
Near-Term GBP/EUR Forecast: Falling unemployment to lift Sterling?
Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate on Tuesday will likely be the publication of the UK’s latest employment figures.
Consensus estimates predict an upswing in employment growth will have led to a fall in unemployment at the end of the second quarter.
While signs of a stronger labour market could strengthen Sterling, any gains could be capped if an expected slowdown in wage growth tempers BoE rate hike bets.
Meanwhile, Germany’s latest ZEW economic sentiment index will be in the spotlight for EUR investors on Tuesday, with an improvement in morale this month potentially offering support to the Euro.
Our currency coverage draws on live market data, official economic releases and published bank research.
