GBP/EUR is currently at around €1.086, up 0.30 per cent this morning but still below yesterday’s high of €1.088.
With a number of prominent central bankers set to speak later this afternoon, EUR investors are hoping that they will be able to learn more about the European Central Bank’s (ECB) outlook on monetary policy when the bank’s President, Mario Draghi, makes his speech later this evening.
There have been a lot of reports recently suggesting that the ECB may be planning to start discussing the tapering of its quantitative easing programme in the near future, which would be the first step towards the bank reigning in its accommodative monetary policy and opening the way for the ECB to start raising interest rates.
However, officials last week moved to quell speculation about Draghi’s speech as they denied the ECB President would discuss the bank’s monetary policy, which may leave investors a little dejected.
David Madden, market analyst at CMC Markets UK, said, “We were told by unnamed sources from the European Central Bank (ECB) that Mr Draghi will not be laying down the groundwork for the tapering of the stimulus package.”
Meanwhile Sterling struggled to cling to its gains against the euro yesterday as investors began to take a closer look at the UK’s latest GDP data.
While the data did report a slight rise in economic growth for the second quarter, it still remains fairly subdued at just 0.3 per cent, making Britain the slowest growing G7 economy so far this year.
On top of this, accompanying data showed that business investment remained flat in the UK between April and June, with analysts attributing the slowdown in investment to companies’ reluctance to increase spending in the face of growing Brexit uncertainty.
Looking ahead the GBP/EUR exchange rate may struggle to keep its head above water over the next few sessions as thin trading volumes over the bank holiday weekend and a lull in UK economic data until next Wednesday leaves the pound exposed to further Brexit concerns.
Meanwhile, the euro may find some strength at the start of next week’s session as economists forecast that both Italy’s consumer and business sentiment will have risen in August following a string of upbeat data from the country in recent weeks.