Euro Pound (EUR/GBP) Exchange Rate Ticks Lower despite Hawkish ECB Rhetoric
The Euro Pound (EUR/GBP) exchange rate is edging lower today, as a lack of impactful data keeps recession anxieties in focus.
At the time of writing, EUR/GBP is trading at around £0.8704, falling by almost 0.2% from the morning’s opening rates.
Euro (EUR) Muted despite Hawkish ECB Comments
The Euro (EUR) is seeing muted trade today, as a lack of data keeps the single currency limited in appeal to traders.
This comes despite hawkish comments from European Central Bank (ECB) policymaker Peter Kazimir. His blog post appears to be proving uninspiring for EUR investors, despite its calls for further tightening.
‘Based on today’s data, we will have to keep raising interest rates for longer than anticipated. So slowing down the pace to 25 bps is a step that will allow us to go gradually higher for longer. Should that be necessary and warranted by incoming data.’
Furthermore, recession anxieties could continue to be weighing on the Euro today. Yesterday, German industrial production data printed far below forecasts, reinforcing the sharp drop seen recently.
As such, investors may be concerned over the possibility of recession in the bloc’s largest economy and the implications therein. Because of this, the Euro appears unable to fully capitalise on the bearish market mood.
Pound (GBP) Buoyed by Strong Retail Sales Data
The Pound (GBP) is enjoying some support this morning, following the release of the British Retail Consortium’s latest data.
The release showed that sales growth had accelerated on a yearly basis in April, printing at 5.2%. This sharply exceeded forecasts of a slowdown in growth. However, it appeared that the likely cause was inflation.
Helen Dickinson, Chief Executive of the BRC, explained:
‘While retail sales grew in April, overall inflation meant volumes were down for both food and non-food as customers continued to adjust spending habits. Clothing sales underperformed as the poor weather left customers thinking twice before decking out their summer wardrobe.’
Euro Pound (EUR/GBP) Exchange Rate Forecast: BoE Rate Hike in Focus
Looking ahead for the Pound, the core catalyst of movement is likely to come on Thursday. The Bank of England (BoE) are scheduled to publish their latest interest rate decision then.
As a 25bps hike is priced in by markets, the accompanying meeting minutes are likely to be investors main point of focus. If they strike a hawkish tone towards inflation, GBP could strengthen. However, if the BoE continues their neutral stance, Sterling could falter.
For the Euro, data releases are relatively thin on the ground. The final German inflation print for April is due tomorrow, however.
If this changes in a significant way from the preliminary readings, it may spark movement for the single currency.
Elsewhere, European Central Bank (ECB) policymaker Isabel Schnabel is due to deliver a speech this evening. If she strikes a hawkish note, EUR could strengthen.