GBP/EUR Exchange Rate Flat Following ECB Bulletin
The Pound Euro (GBP/EUR) exchange rate is trading in a narrow range this morning as markets digest the European Central Bank’s (ECB) latest economic bulletin.
At the time of writing, the GBP/EUR exchange rate is virtually unchanged this morning, leaving the pairing trading at €1.1560.
Euro (EUR) Exchange Rates Muted as ECB Remains Concerns over Growth Risks
The Euro (EUR) is rangebound against the Pound (GBP) and the majority of its other peers this morning after the ECB published its latest economic bulletin.
The bulletin was mostly in line with the bank’s March monetary policy statement as it warned that downside risks to the Eurozone remain as global economic conditions continue to deteriorate.
‘Global headwinds continue to weigh on euro area growth developments. The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets’
The bulletin also reaffirmed the ECB commitment to providing an ‘ample degree of accommodation’ with its monetary policy, capping demand for the Euro as it reinforced speculation that the ECB could leave interest rates on hold until 2021.
Pound (GBP) Struggles to Find Momentum as Brexit Uncertainty Persists
At the same time the Pound (GBP) has been left adrift this morning, with the UK currency struggling to find any momentum amidst a lull in notable data and ongoing Brexit uncertainty.
Despite hopes that the cross-party Brexit talks would be reinvigorated following Parliament’s Easter recess, there has still been no signs of any real progress being made, with both the Conservatives and Labour appearing unwilling to budge on a number of key issues.
Further limiting the appeal of Sterling are also the questions hanging over the future of Theresa May premiership as the PM faces increasing calls to step down as backbencher anger over Brexit continues to grow.
GBP/EUR Exchange Rate Forecast: Euro to Tumble as Eurozone GDP Slows?
Looking ahead, barring any major Brexit developments, the main catalyst in the Pound Euro (GBP/EUR) exchange rate in the immediate future is likely to be the Eurozone’s latest GDP print.
In light of the persistently gloomy economic data released by the bloc in recent months, economists forecast that the Eurozone will have expanded by just 0.1% in the first quarter of 2019.
This is likely to prompt sharp losses in the Euro next week, as it stokes fears that the Eurozone could stagnate this year or even potentially slide into a recession unless something is done to reverse the current downtrend.
Meanwhile the focus for GBP investors next week will likely be on the Bank of England’s (BoE) rate decision.
While no policy changes are expected from the BoE next week in light of the ongoing Brexit uncertainty, Sterling could still be offered some support if the recent uptick in UK economic data prompts a more upbeat outlook from the bank for the rest of the year.