– Written by
David Woodsmith
STORY LINK GBP/EUR Exchange Rate Rallies amid Sterling Data Boost
The Pound to Euro exchange rate (GBP/EUR) rebounded on Tuesday, recovering from a 13-day low as stronger-than-expected UK data breathed fresh life into Sterling.
At the time of writing, GBP/EUR was trading around €1.1411, up nearly 0.3% on the day.
The Pound (GBP) climbed on Tuesday after the UK’s latest labour market figures proved less concerning than markets had feared.
While the data confirmed that unemployment has risen to a four-year high and wage growth is slowing, the overall picture was more resilient than expected. Average earnings eased from an upwardly revised 4.9% to 4.7%, comfortably beating forecasts for a sharper slowdown to 4.4%. Employment also fell by just 16,000, far milder than the 60,000 decline economists had pencilled in.
The figures suggested the jobs market is cooling at a manageable pace, prompting Sterling to firm following the release.
The Pound then received an additional lift from the UK’s latest PMI surveys. December’s services PMI showed activity accelerating, with the index rising from 51.3 to 52.1, helping to underpin confidence and support GBP demand.
The Euro (EUR) weakened on Tuesday after a run of disappointing PMI readings dented confidence in the Eurozone’s growth outlook.
Save on Your GBP/EUR Transfer
Get better rates and lower fees on your next international money transfer.
Compare TorFX with top UK banks in seconds and see how much you could save.
Manufacturing activity contracted further, with the PMI slipping from 49.6 to 49.2, defying expectations for an improvement and signalling a deeper downturn in the sector. The services PMI also undershot forecasts, dropping more sharply than anticipated from 53.6 to 52.6.
Taken together, the weaker data pointed to fading momentum across the bloc’s private sector, prompting the Euro to drift lower as investors reassessed near-term growth prospects.
GBP/EUR Forecast: Cooling UK Inflation to Pressure the Pound?
Looking ahead, attention turns to the UK’s latest inflation figures due on Wednesday.
Headline CPI is forecast to ease slightly from 3.6% in October to 3.5% in November. Such a reading would reinforce the view that inflation has passed its peak and could strengthen expectations that the Bank of England (BoE) will deliver multiple rate cuts, potentially weighing on Sterling.
A sharper-than-expected slowdown in inflation could put the Pound under additional pressure, while any upside surprise may offer GBP some short-term relief.
For the Euro, Germany’s latest business climate survey is also due. With little change anticipated, the impact on EUR may be limited unless the data delivers a notable surprise.
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
