The Pound-Euro could remain subdued if Lagarde strikes a cautious tone, while Sterling may struggle for direction ahead of Thursday’s UK GDP data.
The Pound Euro (GBP/EUR) exchange rate slipped to an eight-day low on Tuesday as a pullback in French bond yields eased concerns about the country’s debt crisis.
At the time of writing, GBP/EUR was trading at €1.1962, marginally down on the day having bounced off an eight-day low of €1.1952.
Pound to Euro (GBP/EUR): 1.19509 (-0.22%)
Euro to Dollar (EUR/USD): 1.115175 (-0.63%)
DAILY RECAP:
The Euro (EUR) enjoyed some support on Tuesday as a continued pullback in French bond yields buoyed the common currency.
Borrowing costs in the Eurozone’s second-largest economy fell for the third consecutive day, with the yield on the 10-year bond hitting its lowest level since 23 September, as a sharp decline in oil prices eased inflation concerns.
French bond yields had hit 24-year highs in October, fuelling fears of a debt crisis, so the continued decline in borrowing costs on Monday and Tuesday helped to alleviate fiscal concerns and supported the Euro.
Meanwhile, the Pound (GBP) struggled to establish a clear direction on Tuesday as a lack of UK economic data left Sterling without a fresh catalyst.
With British data releases thin on the ground at the start of the week, GBP movement remained subdued as investors looked ahead to Thursday’s UK quarterly GDP figures.
Near-Term GBP/EUR Forecast: ECB Speech to Impact the Euro?
Looking forward, a speech from European Central Bank (ECB) President Christine Lagarde on Wednesday morning could influence the Euro. Markets may be looking for any hints about monetary policy, with EUR poised to fall if the ECB chief strikes a cautious tone.
As for the Pound, UK economic data is thin on the ground, potentially muting movement.
In addition, GBP investors may be reluctant to drastically alter their positions ahead of the UK’s third-quarter GDP figures, which are due to be published on Thursday. As a result, Sterling may trade in a relatively narrow range.
Our currency coverage draws on live market data, official economic releases and published bank research.