Euro Pound (EUR/GBP) Exchange Rate Boosted by Hawkish ECB Comments
The Euro Pound (EUR/GBP) exchange rate is climbing today despite a risk-on trading sentiment. Reports that the Bank of England (BoE) may delay its government debt sell-off may be bolstering the currency pair. Hawkish comments from European Central Bank (ECB) officials could also be pushing EUR/GBP higher.
At time of writing the EUR/GBP exchange rate is at around £0.8699, which is up roughly 0.3% from this morning’s opening figures.
Euro (EUR) Muted as Investors Await EU Gas Price Plans
The Euro is seeing subdued trading today, although is making gains against Sterling. A risk-on market mood may be limiting upward movement for the single currency. Additionally, a negative reading of the ZEW economic sentiment index may also be keeping EUR suppressed.
Losses for the Euro prompted by the ZEW figures may not be as bad as expected, however. The better-than-anticipated figures were likely a result of EU proposals to cap gas and electricity prices. Positive speculation concerning these measures may also underpinning EUR today.
Hawkish comments from multiple ECB officials in recent days may also be supporting the single currency today.
Speaking on Monday, ECB board member Joachim Nagel signalled the need for ‘decisive monetary policy action’. Additionally, policymaker Martins Kazaks outlined his desire for two more 0.75% interest rate hikes from the ECB this year.
Pound (GBP) Tumbles as BoE Denies Reports of Delay in Debt Sell-Off
The Pound is slipping against its rivals today. Reports that the Bank of England is set to delay its selling of government bonds could be denting confidence in Sterling, as well as a retreat of risk appetite.
A report by the Financial Times today indicated that the BoE would be delaying the move was denied by the central bank. The report likely pushed GBP lower amid fears that continued volatility in the UK’s economy could limit the central bank’s options.
Susannah Streeter of Hargreaves Lansdown said:
‘It’s clear the bank is still unnerved by the potential for fresh instability in gilt markets given that so much uncertainty still remains about the government’s fiscal plans.’
The continued instability in the UK political sphere may also be prompting losses for GBP today. Multiple Conservative MPs have now called for the resignation of Prime Minister Liz Truss.
EUR/GBP Exchange Rate Forecast: Will Cooler German PPI Figures Prompt Euro Fall?
Looking ahead to the rest of the week for the Euro, the final reading of September’s inflation figures could reaffirm ECB rate hike bets if they print as forecast. This in turn could help to bolster the single currency, although concerns over the impact of high inflation amid a cost-of-living crisis could cap gains.
September PPI data for Germany on Thursday could have the opposite effect on ECB speculation, however. The index is forecast to slip drastically which push EUR lower if the central bank sees it as evidence of cooling inflation.
For the Pound, a predicted uptick in September’s inflation on Wednesday could have a mixed effect on the currency. Whilst the figures would normally bolster bets on further rate hikes from the BoE, the uncertainty in the UK’s economy could see signs of higher inflation dent confidence.
On Friday, an expected drop in September’s retail sales could also weigh on GBP. Further woes for the retail sector could also harm the UK economy’s long-term outlook.
