Euro Pound Exchange Rate Fluctuates as Global Recession Fears Linger
The Euro Pound (EUR/GBP) exchange rate is failing to find a clear direction today as recession fears undermine both the Euro and the Pound.
At time of writing the EUR/GBP exchange rate is trading around $0.8419, moderately unchanged from this morning’s opening levels.
Euro (EUR) Quiet amid Looming Recession Fears
The Euro (EUR) is struggling for support today. A lack of data has opened the single currency to market sentiment. With a potential gas security crisis on the horizon, mixed with fragmentation fears, the Euro could slide further.
Global market sentiment could begin to dwindle once again as geopolitical tensions continue to weigh heavy. Troubling news out of China could also be piling pressure on the Euro. China’s retaliation to the US House of Representatives Speaker Nancy Pelosi’s visit to Taiwan has ramped up tensions between the two countries.
China have since scrapped planned meetings with US President Joe Biden and have threatened sanctions on Pelosi. In response to the visit, live-fire drills have resumed once more around the island of Taiwan. With continuing tensions between the world’s largest economies, the Euro could be under pressure with souring global market sentiment.
Pound (GBP) Wavers amid BoE Downbeat Forecast
The Pound (GBP) remains relatively muted against its peers today. The market continues to digest the worrying economic outlook the Bank of England (BoE) issued following their bumper 50bps interest rate hike.
Recession fears continue to grow on the worsening cost-of-living crisis and endless political volatility. The BoE issued a stark warning as the central bank forecasts a UK recession will hit by the end of the year. With expectations of it lasting throughout the majority of 2023, there are mounting fears of how households will cope with the rising cost-of-living.
Prime Minister Boris Johnson has announced that there are no plans to tackle the escalating living costs. Instead, he proposes it will be a job for the new leader. His spokesperson said:
‘Clearly these global pressures mean challenging times for the public. The government recognised that the end of the year will present wider challenges with things like changes to the (energy) price cap.
‘By convention it is not for this prime minister to make major fiscal interventions during this period. It will be for a future prime minister.
Euro Pound Forecast: German Inflation Reading to Weigh on the Euro?
Looking ahead, data remains thin on the ground until Wednesday with the CPI reading for Germany. An expected softening of the inflation reading for the month of July could see further pressure on the Euro.
Elsewhere, the Pound will be left vulnerable to domestic issues again. The data calendar remains thin until crucial GDP growth data is released on Friday. An expected contraction in the UK economy could weigh further on the Pound amid mounting recession fears.
