The Pound to Euro (GBP/EUR) exchange rate traded in a narrow range on Wednesday as markets showed little reaction to the Eurozone’s latest inflation data.
Pound to Euro (GBP/EUR): 1.15246 (-0.23%)
Pound to Dollar (GBP/USD): 1.34724 (-0.2%)
Euro to Dollar (EUR/USD): 1.16901 (+0.02%)
DAILY RECAP:
The Pound (GBP) was subdued on Wednesday as the absence of impactful UK economic data left Sterling without a clear directional driver.
Wider market trends also kept the increasingly risk-sensitive Pound confined to a narrow range, with geopolitical unease offset by modest optimism around global growth prospects.
Meanwhile, the Euro (EUR) also traded sideways following the publication of the Eurozone’s December consumer price index.
The data showed headline inflation easing from 2.1% to 2.0%, in line with forecasts, while core inflation unexpectedly cooled from 2.4% to 2.3%.
Despite the softer inflation backdrop, the Euro avoided losses. This was partly because Tuesday’s sharper-than-expected slowdown in German inflation was not echoed across the wider currency bloc.
As a result, investors made no meaningful adjustments to expectations for European Central Bank policy, leaving EUR exchange rates broadly steady.
Near-Term GBP/EUR Forecast: Eurozone Data to Drive Direction?
Looking ahead, attention turns to Germany’s latest factory orders data on Thursday, with an expected 1% contraction in November posing a potential downside risk for the Euro.
However, the single currency may find some support later in the session if Eurozone economic sentiment is confirmed at 97 — its highest level since April 2023 — and unemployment is shown to have remained steady at 6.4%.
Geopolitical developments also remain a risk factor for the Euro. Any fresh comments from US officials regarding Greenland could weigh on EUR sentiment.
With UK economic data thin on the ground, the Pound may continue to struggle for direction, leaving GBP/EUR sensitive to broader market trends.
