Euro Pound Exchange Rate Fluctuates as Market Braces for Autumn Statement
The Euro Pound (EUR/GBP) exchange rate is trading narrowly this morning ahead of a busy week of data. Investors remain cautious as they wait in the wings.
At time of writing the EUR/GBP exchange rate is trading around £0.8751, relatively unchanged from this morning’s opening levels.
Pound (GBP) Quiet Ahead of Bleak Autumn Statement
The Pound is struggling for much demand this morning after last week’s rally. A lack of data has left Sterling exposed to market sentiment with GBP investors cautious. The autumn statement from Chancellor Jeremy Hunt is due to be announced on Thursday.
Over the weekend, Hunt made several media appearances alluding to what the autumn statement may mean for the economy. Hunt warned that he will be making very difficult decisions in order to repair the fiscal damage of the mini-budget. Prime Minister Rishi Sunak also warned of the upcoming fiscal statement, adding:
‘Financial conditions in the UK have stabilised clearly, but they have stabilised because people expect the government to take the decisions that will put our public finances on a sustainable trajectory, and it’s the government’s job to deliver on that. And that’s what the chancellor will do.’
Elsewhere, the gloomy outlook for the UK economy continues to weigh heavy. The National Institute of Economic and Social Research (NIESR) has predicted that GDP growth will remain flat in Q4 and contraction risks remain high.
Euro (EUR) Muted amid a Cautious Market
Meanwhile, the Euro is also weighed down by a cautious market mood, with investors reluctant to make moves ahead of the UK fiscal statement.
However, support continues to be drawn from heightened bets of further aggressive interest rate hikes. European Central Bank (ECB) Vice President Luis de Guindos reassured EUR investors that further rate hikes are necessary, and bringing inflation down remains a top priority. De Guindos said:
‘We will continue raising rates to a level that ensures inflation will come back into line with our definition of price stability. We have to do our job.’
Euro Pound Forecast: UK Macro Data to Boost the Euro?
Looking ahead, the Euro Pound exchange rate could see fluctuations in the coming week of key data releases from the UK. Crucial employment data and inflation reading could impact the market ahead of Thursday’s autumn statement.
The latest UK labour market report could show that the jobs market is cooling, and an expected climb in job vacancies could highlight the waning demand. But with an expected 3.5% unemployment level remaining at record lows, the Pound could be boosted.
Meanwhile, the Euro could see movement with speeches from several ECB policymakers. ECB Chairman of the Supervisory Board Andre Enia and Vice President Luis de Guindos are set to speak later today. Any further hints at monetary policy and the Euro could climb.