Looking forward to the week ahead, key economic data is set to be released which will have an impact on the GBP/EUR exchange rates. With the GBP still surrounded in Bank of England (BoE) rate cut mystery, economic data will be key in deciding which way the bank shifts towards. Investors attention will also be across the pond as they observe the USD’s performance. Recent strengthening of the currency has seen it edge over the euro which has had consequences for the downside of the GBP/EUR exchange rates.
Flash Composite PMI’s Could Shape the Direction of the UK Economy and Bank of England Cuts
After it came to light the members from the BoE took a dovish stance on the UK’s monetary policy at the end of last week leading into the start of this week, the GBP sunk. Members of the MPC at the BoE suggested that they would vote in favour of a rate cut should the UK’s economic data not improve. The pressure was piled on the BoE as the GBP lost favour with the markets and the release of the UK’s retail sales figures which came in under expectations. Now, the UK will look towards next Fridays flash composite PMIs for December in a bid to reverse the recent damage done to the Pound. Economists at Pantheon Macroeconomics suggest that the BoE’s rate cuts could be fended off should the PMIs show a positive figure. Therefore, investors will be hoping that this will be the case and the GBP can rebound.
Euro Limited on USD’s Strength Which Could Only Improve Following US Data Releases
The euro’s strength has been capped at the performance of the USD of late. This performance could be set to continue if the US economic data pulls through. The US retail sales at the end of this trading week came out on top for the currency, sending it higher in the market. But the market suggest that the USD may come under fire if its key consumer data underperforms after the US manufacturing sector continued to show soft figures. Investors will also keep an eye on the US housing data which could cool 2020 Fed rate cuts should it show continual improvement. Should this be the case, the euro is likely to suffer which will have a knock-on effect for the GBP/EUR rates.
If you have any GBP/EUR currency transfers to consider and wish to be kept up to date with all the events and news in the market ahead of this potential crucial time. Feel free to contact myself, Jonathan Watson, using the form below.