January 8, 2025 – Written by John Cameron
STORY LINK Pound to Euro Rate Flat despite Warming Eurozone Inflation
The Pound Euro (GBP/EUR) exchange rate was largely unchanged on Tuesday following the release of the Eurozone’s latest inflation data.
On Tuesday, the Euro (EUR) failed to make significant progress against most of its counterparts, even as the Eurozone released its latest consumer price index (CPI).
In December, the Eurozone’s headline inflation rate increased from 2.2% to 2.4%, aligning with market expectations. Similarly, core inflation remained steady at 2.7%, matching forecasts.
Additionally, the Eurozone’s unemployment rate, also released on Tuesday, stayed at a record low of 6.3% for November of the previous year.
Despite these positive economic indicators, particularly the inflation data that reduced the likelihood of an ECB interest rate cut, the Euro found it difficult to gain traction.
The currency was weighed down by a generally optimistic market sentiment, which diminished demand for safe-haven assets such as the common currency.
On Tuesday, the Pound (GBP) fluctuated within a wide range against most of its major counterparts amid an overall positive market mood.
Given its moderate sensitivity to risk, the Pound gained ground against some safe-haven currencies, notably the US Dollar (USD), during the upbeat trading session.
However, as the Pound is not overtly risk-sensitive, it lost value against several of its more risk-tolerant peers, including the New Zealand Dollar (NZD) and the Australian Dollar (AUD).
GBP/EUR Exchange Rate Forecast: Eurozone Releases to Remain in the Spotlight
Looking ahead to Wednesday, the primary factor influencing the Pound Euro exchange rate will likely be new economic data from the Eurozone.
First up, the Eurozone will release its December consumer confidence index and economic sentiment index, both of which are expected to show further declines. This could put downward pressure on the Euro during the early part of Wednesday’s trading session.
Later, the Eurozone will also publish its latest industrial sentiment indicator and Producer Price Index (PPI) data. With the industrial sentiment indicator forecast to fall and PPI expected to rise in November, EUR exchange rates may experience a mixed trading session mid-week.
As for the Pound, GBP exchange rates are likely to lack a clear direction, as there will be no UK economic data released on Wednesday.
International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Euro Forecasts
