What are GBP to EUR forecasts?
The GBP/EUR exchange rate started strong in May, as the pound reached an 11-month high against the greenback. With inflation in the UK reaching double digits at 10.1%, economists are anticipating the Bank of England to maintain its contractionary monetary policy stance. Despite the surge in inflation and the labor shortages, GBP/USD managed to surpass the US$1.2600 mark on the 4th of May. Additionally, GBP/USD enjoyed a solid overall performance in April, with the currency pair having closed up at US$1.2565 from its opening rate of US$1.2315. However, the lack of economic data and increasingly risk-sensitive UK currency could affect the pound, and a slowdown in activity from the UK PMIs might dent the sterling's strength in the market.
The Eurozone economy's overall performance remains a major factor affecting the euro exchange rate. Recently, the euro experienced fluctuations due to the lack of clear direction in its trading, causing it to trade without a determined path. A weaker-than-expected consumer confidence reading dented the demand for euros, while its negative correlation with a stronger USD put additional pressure on the single currency. If Eurozone PMIs later today indicate weakening private sector activity, the euro could face headwinds. Market view suggests that GBP to EUR at 1.1516 is 1.3% above its 3-month average of 1.1369, which remained stable in a 3.0% range, from 1.1189 to 1.1526.