The European Central Bank announced on Thursday that the results of its first targeted longer term refinancing operation, or TLTRO, have been disappointing as Eurozone banks have taken much less than forecasted. With the final poll on Scottish independence showing the lead to be in favour of the Unionists the Pound has firmed up a little against many of its most traded currency peers.
The Euro to Pound Sterling exchange rate is currently trending in the region of 0.7883.
Those invested in the Euro will have been pleased on Wednesday after the Eurozone Consumer Price Index gained fractionally on the market consensus of 0.3% to 0.4%. However, the continued falling value of crude oil seriously weakens the outlook for consumer prices.
Wednesday’s British data was relatively mixed. Unemployment showed a positive declination from 6.4% to 6.2%, but average weekly earnings showed the smallest growth since comparable records began at 0.6%. The miscorrelation between inflation and wage growth has marred expectation of a near-future benchmark rate hike.
On Wednesday the Bank of England published the minutes from their most recent monetary policy meeting. The minutes revealed that two of the policymakers voted against Governor Mark Carney’s stance on monetary policy.
The Euro to Pound Sterling exchange rate has hit a low today of 0.7882.
Thursday saw the European Central Bank announce the results of its first targeted longer-term financing operation, which is designed to boost liquidity at Eurozone Banks. The ECB said that 225 bidders were allotted 82.60 billion Euros which was well below the expectations of 100-150 billion. ING Bank Economist Martin van Vliet said; ‘The take-up in the first TLTRO is disappointing and will raise further doubts about the feasibility of the ECB’s intention to increase its balance sheet by around EUR 1 trillion’. He went on to give a possible reason for this stating; ‘Perhaps banks first want to see the details of the ECB’s covered bond and ABS purchase programmes, which will be unveiled early next month, before pledging these assets as collateral in an TLTRO’.
British retail sales data has printed relatively disappointingly on Thursday. Retail Sales including Auto saw a yearly growth of 3.9% in August which is up from the previous figure of 2.5%, but below the market consensus of 4.0%. Similarly year-on-year Retail Sales improved upon the previous figure of 3.3%, with Augusts’ print reaching 3.9%, but was still below the forecast figure of 4.8%.
With the Scottish referendum fast approaching, the Pound has rallied on the final independence poll which has put the Unionists ahead at 53%.
The Euro to Pound Sterling exchange rate has reached a high today of 0.7912.
UPDATE
The Euro to Pound (EUR/GBP) exchange rate was trading in the region of 0.7855 on Friday having fallen in reaction to the news that Scotland’s attempt to secure independence was unsuccessful.
The pairing experienced minimal movement as Germany released its producer price index, which showed monthly and annual declines of -0.1% and -0.8% respectively.
Next week there is little on the UK’s economic calender so it will be developments from the Eurozone driving EUR/GBP movement.
