GBPEUR exchange rate is projected to stay above 1.16 in the upcoming days, following a slight dip at the end of August, which fell short around 1.1620. The subsequent recovery indicates the possibility of another attempt to reach the highest levels seen in 2023. The price movement in GBPEUR continues to display volatility, though it remains within a relatively well-defined range. The 1.1772 level is once again within reach. However, it's worth noting that in 2023, the pair has not successfully closed above 1.1764 (0.85p). This serves as a reminder that significant resistance exists in this range, typically leading to a decline in GBP and a drop in the exchange rate below 1.17.
The UK economic calendar for this week is relatively sparse, limiting potential for negative developments related to the UK. Of note this week is the scheduled appearance of the Bank of England's Monetary Policy Committee (MPC) members before the Treasury Select Committee in Parliament on Wednesday. During this session, they will face questioning about the recent updates regarding UK inflation and interest rates. Following Bank of England Chief Economist Huw Pill's recent statements, it is anticipated that MPC members will signal concerns about persistently high inflation, potentially leading to further interest rate increases. This is likely to strengthen market expectations for another 25 basis point hike in September, which is already factored in, to some degree.
The spotlight today is on members of the European Central Bank (ECB) Governing Council, particularly ECB President Christine Lagarde, who is set to provide remarks at 14:30 BST. It is expected that ECB members will recognise the ongoing challenges posed by elevated inflation levels in their decision-making process, potentially tilting towards another interest rate increase in September.
On Thursday, the Eurozone GDP for the second quarter is set to be unveiled, with expectations pointing to a 0.3% quarter-on-quarter increase. If the actual figure falls short of this expectation, it will further support the notion that the economy is facing greater challenges than the ECB initially anticipated. This, in turn, could lead to the belief that the central bank might postpone a rate hike in September, allowing the effects of previous rate hikes to take effect.
