Despite a dovish speech given by Bank of England Chief Economist Andy Haldane, the Pound is holding in a position of strength against the single currency. Anxieties regarding growth disparity in the Eurozone, in addition to fears of a fresh financial crisis, have seen the Euro soften versus its major peers.
The Euro to Pound Sterling exchange rate is currently trending in the region of 0.7964.
A hawkish speech given by Bank of England policymaker Martin Weale allowed Sterling to surge on Thursday, gaining on the majority of its most traded currency competitors. Weale argued that the BoE should avoid being reactionary to inflationary pressure, but rather hike rates in anticipation of improved wage growth.
‘The margin of spare capacity is shrinking rapidly and all logic suggests that that ought to lead to an increase in inflationary pressures over the two to three year horizon which concerns the MPC,’ stated Weale.
Some positive domestic data results on Thursday aided the Euro in avoiding a huge declination. The finalised figure for the Eurozone Consumer Price Index equalled the initial estimates of 0.3%. Additionally, the Eurozone Core CPI eclipsed initial estimates of 0.7%, with the finalised result reaching 0.8%.
The Euro to Pound Sterling exchange rate has fallen to a low today of 0.7952.
On Friday the Pound softened a little against the majority of its currency rivals after BoE’s Chief Economist Andy Haldane gave a dovish speech. ‘Recent evidence, in the UK and globally, has shifted my probability distribution towards the lower tail,’ he said. ‘Put in rather plainer English, I am gloomier.’
In a speech in Kenilworth, Mr Haldane added: ‘That (referring to his gloomy outlook) reflects the mark-down in global growth, heightened geo-political and financial risks and the weak pipeline of inflationary pressures from wages internally and commodity prices externally. Taken together, this implies interest rates could remain lower for longer, certainly than I had expected three months ago, without endangering the inflation target.’
The single currency has also softened on Friday amid renewed fears that the 18-nation currency bloc is headed for a fresh financial crisis. Charles Wyplosz, professor of international economics at the Graduate Institute Geneva, stated that European government officials have been ‘deluding’ themselves that the crisis was over and the Eurozone would show signs of recovery.
‘What we see now is the revelation that the situation in the Eurozone is very precarious,’ Wyplosz added. ‘We are sitting on a powder keg.’
Forecast for the Euro to Pound Exchange Rate
With a lack of domestic data to provoke volatility, the Pound is likely to gradually soften as investors digest the dovish comments from Andy Haldane.
Similarly, the Euro is most likely to continue to depreciate against the majority of its peers as economists contemplate the likelihood of Eurozone recession.
The Euro to Pound Sterling exchange rate has risen to a high today of 0.8005.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2808,
Euro,,Canadian Dollar,1.4399,
Euro,,Pound,0.7952,
Euro,,Australian Dollar,1.4595,
US Dollar,,Euro,0.7807,
Canadian Dollar,,Euro,0.6944,
Pound Sterling,,Euro,1.2559,
Australian Dollar,,Euro,0.6851,
[/table]
