Pound To Euro Forecast For Coming Week Where Next For GBP EUR Exchange Rate Buyers (2024)

The Pound Euro (GBP/EUR) exchange rate edged higher last week and touched fresh 11-month highs following the publication of both the UK’s and the Eurozone’s preliminary PMIs.

At the time of writing, the GBP/EUR exchange rate traded at around €1.1851, virtually unchanged from the start of Friday’s trading session.

The Euro (EUR) began the week trapped in a narrow range against the majority of its peers as a lack of data releases from within the Eurozone saw the currency struggle to find a clear trajectory.

On Wednesday, an underwhelming PMI reading served to undermine the common currency as both the services and manufacturing indices came in below forecast.

The Eurozone’s services index fell from 52.8 to 51.9 rather than rising to 53 as forecast, marking the lowest reading in a five-month period, while the manufacturing index fell from 45.8 to 45.6 rather than rising to 46.1, printing at a year-to-date low.

Offsetting some of EUR’s losses on Wednesday however was a better-than-expected GFK consumer confidence index which printed at a two-year high.

On Thursday, the common currency struggled to garner investor attention following the publication of Germany’s IFO business climate index.

The index fell for a third consecutive time, declining from 88.6 to 87 rather than rising to 88.9 as expected. This marked the lowest reading since February 2024 which ultimately stymied EUR exchange rates in the wake of the release.

The Euro closed the week largely unmoved by the publication of the Eurozone’s latest consumer inflation expectations which printed higher-than-expected.

The index revealed that expectations remained unchanged at 2.8% in June, holding at their lowest levels since September 2021.

However, despite the upbeat data release, EUR closed the week mostly rangebound against its counterparts.

Poudn Sterling (GBP) Underpinned by Services PMI

Similarly to the Euro, the Pound (GBP) began the week treading water against the majority its peers amid a lull in domestic data.

However, the Pound was able to enjoy some modest support on Wednesday following the publication of the UK’s latest PMIs.

July’s preliminary reading showed that the services sector continued to expand, with the index rising from 52.1 to 52.4, while the manufacturing index rose from 50.9 to 51.8.

Signs of domestic strength served to further ramp up recent optimism within the UK, underpinning GBP exchange rates as a result.

Moving into Thursday, Sterling struggled to catch bids amid shifting a title="Bank of England (BoE)" target="_blank" href="https://www.bankofengland.co.uk/Pages/home.aspx">Bank of England (BoE) interest rate cut bets.

With just a week to go before the central bank’s upcoming interest rate decision, a recent poll by Reuters which showed that over 80% of economists they interviewed expected to see the central bank cut rates from 5.25% to 5% stymied the Pound.

Ongoing speculation over whether the central bank would enact a rate cut on Thursday alongside a further lull in macroeconomic data saw Sterling close the week muted against its peers.

GBP/EUR Exchange Rate Forecast: Multitude of Data to Infuse Volatility?

Looking ahead, the GBP/EUR exchange rate could experience volatility this week amid the publication of several Eurozone data releases along with the Bank of England’s upcoming interest rate decision.

Looking at Tuesday, the Eurozone’s flash GDP reading is forecast to show a slight downturn in Q2’s figures, and could set to temper with EUR trade.

On Wednesday, the Eurozone’s preliminary inflation reading is expected to show that both headline and core inflation are moving closer towards the European Central Bank (ECB)’s target, and could undermine the single currency in mid-week trade.

Turning to the Pound, GBP investors will cast their eye to the Bank of England’s upcoming interest rate decision, scheduled for Thursday.

Will the recent optimistic data releases be enough to see the central bank keep rates unchanged? Or will they decide to cut rates and undermine Sterling sentiment?