Pound-Euro could hold above €1.17 if UK rate expectations remain firm, although stronger German inflation may help the Euro recover.
The Pound to Euro (GBP/EUR) exchange rate held near a two-week high on Tuesday as investors waited for key UK and Eurozone data later in the week.
At the time of writing, GBP/EUR was trading around €1.1701, little changed on the day.
DAILY RECAP:
The Pound (GBP) held its ground on Tuesday despite the absence of fresh UK economic data.
While the lack of a clear catalyst limited movement, Sterling remained supported by expectations that the Bank of England could still raise interest rates before the end of the year.
UK government bond yields, often closely linked to interest rate expectations, climbed back above 5% as renewed uncertainty in the Middle East pushed oil prices higher.
Meanwhile, the Euro (EUR) remained close to a two-week low against the Pound as a quiet Eurozone economic calendar left the single currency struggling to recover.
EUR also faced pressure from its strong inverse relationship with the US Dollar, which edged higher through the session.
Nevertheless, the Euro was able to resist further losses against Sterling.
Near-Term GBP/EUR Forecast: German Inflation to Support the Single Currency?
Looking ahead, Germany’s final July inflation figures will be the main Eurozone release on Wednesday.
If the data confirms a stronger rise in price pressures in the bloc’s largest economy, the Euro could attract fresh support.
External factors may also influence GBP/EUR, particularly the Euro’s inverse relationship with the US Dollar. If Wednesday’s US inflation figures weigh on the Greenback, the single currency could benefit.
Meanwhile, a lack of UK economic data may leave Sterling without a strong domestic catalyst ahead of Thursday’s GDP figures.
Our currency coverage draws on live market data, official economic releases and published bank research.
