Although the UK has enjoyed a string of positive data releases in recent weeks, according to the Bank of England the nation’s economic recovery is still too lacklustre to consider a rate increase for some time to come.
The Pound Sterling to Euro Exchange Rate was in the region of €1.1641 as of 10:05 GMT
1 Euro is currently worth 0.8592 pence
Following yesterday’s BoE rate decision the Monetary Policy Committee stated that the UK’s economy: ‘remains weak by historical standards and a degree of slack is expected to persist for some time [and] the implied rise in the expected future path of Bank Rate was not warranted by the recent developments in the domestic economy.’
Rates were held at record lows, as expected.
The surprisingly dovish stance of the BoE knocked the Pound and the British currency weakened against the majority of its most traded rivals.
Although losses against the Euro were initially tempered as the common currency also broadly softened in response to the European Central Bank’s own pessimistic outlook, the Pound went on to weaken to 86.33 pence per Euro – its lowest level since mid-April.
The GBP/EUR exchange rate hit a low of €1.1606
Against the US Dollar the Pound plummeted to a three-month low.
As senior currency strategist Jane Foley observed: ‘Carney caught the market unawares, he was attempting to ensure that market expectations remain more focused on the UK economy than the US. He wanted to draw attention to the fact that the recovery is very nascent, very fragile. That leaves the Pound weaker.’
The GBP/USD pairing was also adversely affected as the US Dollar broadly strengthened ahead of the publication of today’s highly influential US non-farms payrolls figures. The US employment data is expected to show that the world’s largest economy added 165,000 positions, allowing the unemployment rate to fall to 7.5 per cent. If the figures should meet or exceed expectations, speculation surrounding when the Federal Reserve will rein in stimulus will mount and the ‘Greenback’ could extend its gains.
While US news is likely to be the main cause of market volatility today, fluctuations in the GBP/EUR pairing could also be inspired by a German factory orders report. The data is expected to show that factory orders gained by 0.1 per cent in May following April’s 0.4 per cent decline.
Big UK news to watch out for next week includes UK industrial/manufacturing production figures and the NIESR GDP estimate for June.
Current Pound Sterling (GBP) Exchange Rates
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5001 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1641 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.6384 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9187 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6662 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8592 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6102 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5205 >
(As of 10:05 GMT)
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