Euro Pound Exchange Rate Climbed as UK Domestic Woes Dominate
The Euro Pound (EUR/GBP) exchange rate rallies as the cost-of-living crisis weighs on the UK and the negative correlation with the weakening US Dollar.
At time of writing the EUR/GBP exchange rate is trading around £0.8419, skyrocketing 0.33% from this morning’s opening levels.
Euro (EUR) Buoyed on Upbeat Global Market Sentiment
The Euro (EUR) is enjoying success today as further data points to easing inflationary pressures in the US. Paring Federal Reserve rate hikes sappes demand for the ‘Greenback’ and bolstered the Euro.
Following a softer-than-expected CPI inflation reading, consumer price data for the US also revealed a slowdown in inflationary pressures. With many experts believing that inflation has now peaked, the US Dollar has seen a considerable drop in demand.
The negative correlation the Euro has with the US Dollar is seeing demand spike for the single currency, despite the headwinds that have been weighing on the Euro.
Pound (GBP) Under Pressure as Fears of Looming Recession Weigh Heavy
The Pound (GBP) is struggling for demand today as the cost-of-living crisis looks set to worsen. The energy bill price hike is looming and without a solid financial aid plan from the government, investors are concerned for the economy.
Chancellor Nadhim Zahawi and Business Secretary Kwasi Kwarteng met with energy bosses today. They attempted to find a solution to the record profits at the expense of the UK. A notable absence of two of the biggest energy suppliers, BP and Shell, did not bode well for a mutual solution going forward.
Following the meeting, Zahawi said:
‘We have already acted to protect households with £400 off energy bills and direct payments of £1,200 for 8m of the most vulnerable British families. In the spirit of national unity, they (energy supply bosses) agreed to work with us to do more to help the people who most need it.’
Fears grow that the government is not doing enough, and quick enough. With the situation set to worsen through the autumn and winter months, former PM Gordon Brown said:
‘Time and tide wait for no one. Neither do crises. They don’t take holidays, and don’t politely hang fire – certainly not to suit the convenience of a departing PM and the whims of two potential successors.’
Euro Pound Forecast: Contraction of the UK Economy to Sink the Pound Further?
Market attention will switch to the release of UK GDP data tomorrow. If forecasts print accurately, Sterling could sink even further. An expected 0.9% contraction could serve to highlight recession fears, confirming the Bank of England’s (BoE) gloomy economic outlook.
Meanwhile, the Euro could see further movement with several data releases tomorrow. Industrial production in the Eurozone and French inflation data for July could impact the Euro.
