Euro Pound (EUR/GBP) Exchange Rate Sluggish as GBP Investors Struggle for Impetus
The Euro Pound (EUR/GBP) exchange rate is rangebound this morning as a lack of impactful data is hindering support for the Pound (GBP).
At the time of writing the EUR/GBP exchange rate is trading at around £0.8710 which is virtually unchanged from this morning’s opening rate.
Pound (GBP) Muted amid Cost-of-Living Woes
The Pound is struggling for support this morning as a lack of impactful data is seeing investors turn to domestic headlines for trading guidance.
This follows the Pound’s modest recovery yesterday as a combination of dip-buying and a risk-on mood supported the currency.
According to Kantar Worldpanel, supermarket inflation in the UK has reached 14.7%, the highest reading on record. This could be prompting caution among GBP investors as cost-of-living concerns overshadow yesterday’s gains.
Adding further pressure is the fact Kantar expects food inflation to keep climbing. Kantar’s Head of Retail and Consumer Insight, Fraser McKevitt, said:
‘Nine in ten of this group say higher food and drink prices are a major concern, second only to energy bills, so it’s clear just how much grocery inflation is hitting people’s wallets and adding to their domestic worries.’
Euro (EUR) Upside Limited Pending Retail Data
The Euro (EUR) is also under pressure this morning, as investors await the release of the Eurozone’s retail figures.
The figures for September are expected to increase by 0.4% following a 0.3% contraction in August, which could give the Euro a much-needed boost.
However, there is a possibility that the figures could miss the mark. Retail sales fell for three consecutive months previously, signalling that higher inflation is driving down sales across Europe. As such, investors seem cautious ahead of the release.
Also limiting the Euro’s upside this morning is its negative correlation with the US Dollar (USD). With a risk-off mood supporting the safe-haven Dollar, EUR is coming under pressure.
Euro Pound Exchange Rate Forecast: GBP to be Dented by Economic Sentiment?
Looking ahead the Euro Pound exchange rate could be driven by the deepening economic crisis within the UK.
A lack of significant data until Thursday could see the Pound continue to trade on domestic headlines. If inflation concerns continue to dominate the news, then the Pound could suffer a dip.
A speech from Bank of England (BoE) policymaker Silvana Tenreyro on Thursday could impact the Pound. If she strikes a dovish tone, this could undercut GBP.
Turning to the Euro it could also suffer amid a lack of data. As a result, investors will likely focus on the geopolitical tensions within Ukraine. Civilians are preparing for blackouts as they brace for further infrastructure attacks from Russia. Any escalations to the fighting will likely dent the Euro.