Pound To Euro Forecast For Week Ahead: UK/French Elections Key Driver For GBP/EUR Exchange Rate (2024)

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By Adam Solomon

Published: Jun 30, 2024 at 14:00

Updated: Jun 30, 2024 at 14:17

GBP to EUR Week Ahead Forecasts

Pound To Euro Forecast For Week Ahead: UK/French Elections Key Driver For GBP/EUR Exchange Rate (1)

The Pound Euro (GBP/EUR) exchange rate traded in a wide range last week following the publication of several high-impact data releases from within the Eurozone.

At the time of writing, the GBP/EUR exchange rate traded at around €1.1812, virtually unchanged from Friday’s opening levels.

The Euro (EUR) started the week struggling to garner investor attention following the publication of Germany’s latest Ifo business climate survey.

June’s index reported a surprising downturn in business morale which ultimately undermined EUR sentiment at the beginning of the week.

Moving into mid-week trade, the Euro weakened again following an unexpected decline in German consumer confidence.

On Thursday, the Euro managed to shrug off Wednesday’s decline in Eurozone economic sentiment, as signs of rising consumer inflation expectations lent the single currency some support.

However, the common currency closed the week on the back foot following the publication of the latest German jobs data.

German unemployment unexpectedly rose for the first time in sixth months, rising to 6% rather than holding at 5.9% as expected.

As the survey reached its highest level since May 2021, the Euro struggled to attract support at the end of the week.

EUR investors were also likely reluctant to place any aggressive bets on Friday ahead of France’s upcoming election over the weekend.

Pound (GBP) Undermined by Mid-Tier Data

The Pound (GBP) began the week muted against its peers despite the Confederation of British Industry’s (CBI) latest industrial trends survey exceeding expectations.

However, on Wednesday, the Pound was put under pressure following the CBI’s latest distributive trades survey.

The index showed an unexpected slump in retail sales in June, which served to fuel recent fears that the UK’s economic recovery may be stagnating.

On Friday, the UK’s final GDP reading for the first quarter of the year was revised higher, from 0.6% to 0.7%, printing at the strongest pace since the last quarter of 2021.

However, despite the upbeat reading, Sterling struggled to garner investor attention as a cautious market mood weighed on the increasingly risk-sensitive Pound.

GBP/EUR Forecast: UK Election and Slew of Data to Drive Movement

Looking ahead, the primary catalyst of movement for the Pound Euro exchange rate this week will likely be the UK’s upcoming election and a number of scheduled data releases.

Looking at the Pound, on Monday, the final manufacturing PMIs for June are expected to remain in expansion territory (a reading over 50) which will likely see Sterling start the week on the front foot.

On Wednesday, the all-important services sector PMI survey is also forecast to remain in expansion territory which will likely bolster GBP exchange rates during mid-week trade.

On Thursday, Sterling is likely to experience movement with the arrival of the UK’s general election. Any unexpected results could infuse significant volatility into the Pound at the end of the week.

Turning to the Euro, on Monday, German inflation is forecast to fall from 2.4% to 2.3%. Should the data match expectations, this will likely ramp up European Central Bank (ECB) interest rate cut bets, and in turn undermine the single currency.

On Tuesday, both core and headline Eurozone inflation is also forecast to cool which will likely see the Euro’s potential downside persist.

Also on Tuesday, the Eurozone’s unemployment rate is forecast to remain at record lows which will likely further weigh on EUR.

On Thursday, Germany’s latest factory orders are expected to show a rebound in its latest reading which could lend the common currency some modest support.

Finally on Friday, an unexpected uptick in both German industrial production and Eurozone retail sales will likely see the Euro close the week firming against its peers.

Pound To Euro Forecast For Week Ahead: UK/French Elections Key Driver For GBP/EUR Exchange Rate (3)

Adam Solomon

Contributing Analyst

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