Home » Pound Euro exchange rate volatile amid mixed UK data

Pound Euro exchange rate volatile amid mixed UK data

The Pound Euro exchange rate traded in a wide range this week, following the publication of some high-impact UK data releases. 

Pound rocked by employment and inflation releases 

The Pound Euro exchange rate initially firmed this week. The increasingly risk-sensitive Sterling was underpinned by cautiously optimistic mood. While a lull in data left the Euro to trade without direction. 

The upside in the Pound was then reinforced on Tuesday as the UK’s latest jobs report was more upbeat than expected. At the same time, the Euro was left on the back foot, despite a stronger-than-expected rebound in German economic sentiment this month. 

The GBP/EUR exchange rate then faltered in mid-week trade as UK inflation printed below expectations in October, further undermining Bank of England (BoE) interest rate expectations. 

As we entered the second half of the week the Euro was able to consolidate its recovery against the Pound as a souring market mood and weakening US Dollar bolstered demand for the safe-haven currency. 

Closing out the week was the publication of the UK’s latest retail sales figures. These placed more pressure on Sterling after an unexpected contraction in sales growth last month stoked fears that the UK could slip into a recession. 

UK Autumn Statement in focus 

Turning to next week, the spotlight looks to be on the UK’s Autumn Statement, which will be delivered by the Chancellor of the Exchequer Jeremy Hunt on Wednesday. 

Hunt will outline the government’s plans for tax and public spending and respond to the latest forecasts from the Office for Budget Responsibility (OBR). 

Anyone hoping that Hunt will announce major tax cuts or spending plans is likely to be disappointed. Hunt has previously warned that such moves would be ‘virtually impossible’. Could a tepid response to the statement lead the Pound to weaken? 

Also set to influence GBP exchange rates next week are the UK’s latest PMIs. November’s preliminary figures are expected to report another contraction in UK private sector growth, likely dragging Sterling lower in the process. 

The Eurozone’s own PMI figures are likely to act as the main catalyst of movement for the Euro next week. Private sector activity is also forecast to slump again this month, with a deeper contraction than in the UK, potentially leading to even more pressure being placed on the single currency. 

If you’ve got a GBP/EUR currency transfer to arrange, the team at TorFX are on hand to help. Get started now to access bank-beating exchange rates and fast, free transfers. 

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