Noticias de la Cámara

GBP/EUR climbs to six-month high on lacklustre Eurozone data

06/02/2024 currenciessdirectslogo

The pound euro exchange rate got off to a roaring start in 2024, with the pairing climbing to its highest levels since August as a string of underwhelming Eurozone data releases dragged on EUR.

What happened last month?

The euro has gotten off to a pretty dreadful start in 2024, with a clear EUR selling bias emerging from the start of January.

This downturn in the single currency was linked to some disappointing Eurozone data releases and was further reinforced by its negative correlation with the US dollar.

Some support for the euro came in response to some hawkish commentary from European Central Bank (ECB) officials throughout the month. Although this quickly unravelled amid disappointment that the ECB didn’t do more to push back against rate cut speculation following its first policy meeting of the year. 

The pound trended broadly higher through the month of January, but it was far from plain sailing for the currency.

Uneven UK data was a key source of volatility for Sterling. While stronger-than-expected service sector growth and a surprise acceleration in inflation reflected positively on GBP exchange rates, the pound also faced headwinds as underwhelming GDP and retail sales figures stoked UK recession fears. 

So far in February the pound is off to an erratic start, following some mixed messages from the Bank of England (BoE) in the wake of its first policy meeting of 2024.

GBP/EUR forecast

Markets will keep a close eye on upcoming UK and Eurozone economic data over the coming month.

Although the Eurozone appears to have narrowly avoided slipping into a recession, the outlook for the bloc remains fairly bleak. If EUR data continues to disappoint it might raise questions over the Eurozone’s economic trajectory in 2024, as well as placing more pressure on the ECB to begin loosening its monetary policy.

In terms of GBP data, the focus will be on whether or not the UK slipped into a recession in the second half of 2023. The UK’s latest GDP figures will be published in the second week of February and could place significant pressure on the pound if they confirm growth contracted for a second consecutive quarter.

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