After putting on valiant performance since Tuesday, the Euro to GBP exchange rate fell by 0.40% during the local session.
While the Euro was holding steady due to a dearth of reports for the Eurozone, the Pound jumped against its currency counterparts in response to the measures outlined by the Bank of England in its latest Financial Stability report.
Earlier in the week the BoE pushed the Pound down from previous highs against the Euro and US Dollar as Governor Mark Carney backtracked on previous hints regarding the timeline for raising interest rates.
Sterling careened below technical resistance levels against both the US Dollar and Euro and edged lower against rivals like the Australian Dollar and New Zealand Dollar.
The Euro to GBP exchange rate held gains on Wednesday after the Confederation of British Industry’s reported sales figure showed a steep, and completely unexpected, drop in sales volumes.
Germany’s GfK Consumer Confidence survey (released the same day) showed an increase from 8.6 to 8.9. The measure of German sentiment is now at almost record highs.
Today the BoE asserted that the UK’s overheating housing market poses the biggest risk to national financial stability. Consequently, the central bank plans to introduce measures to protect the economy from the detrimental impact of soaring house prices.
Carney stated; ‘With recovery in the UK gaining momentum, the Bank of England is now focused on turning that recovery in to a durable expansion. [High indebtedness] if left unchecked could undermine that durability. The biggest risks relate to the housing market.’
The central bank has recommended that the number of 4.5 x income mortgages be restricted and that any borrowers who fail a new repayment test should be declined a mortgage.
The fact that the steps described by the BoE are slow and measured was Pound supportive and the British asset advanced.
The Euro to Pound exchange rate was trending in the region of 0.7990 in the aftermath of the BoE announcement, and with no further notable European data releases to be aware of today, additional fluctuations will be limited.
As the day progresses, some market movement could be occasioned by the US Personal Income, Consumption and Spending figures. If the reports should turn out to be as much of a flop as yesterday’s US data, the Euro could advance on the US Dollar (EUR/USD).
UPDATED 06:55 GMT 27 June 2014
Euro to GBP Exchange Rate Holds below £0.80
The Euro to GBP exchange rate fell below technical resistance levels yesterday after the Bank of England published a Financial Stability report outlining methods for dealing with the UK’s over heating housing market.
The pairing strengthened modestly but largely held these declines as UK data showed a slight dip in UK Consumer Confidence and a slowing in UK house price gains.
Further Euro to GBP exchange rate volatility could be sparked by today’s UK growth figures and German Consumer Price Index.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Pound Sterling,0.7995,
Euro,,US Dollar,1.3612,
Euro,,Canadian Dollar,1.4574,
Euro,,Australian Dollar,1.4463,
Euro,,New Zealand Dollar,1.5536,
US Dollar,,Euro ,0.7345,
Pound Sterling,,Euro,1.2536,
Canadian Dollar,,Euro,0.6859,
Australian Dollar,,Euro,0.6913,
New Zealand Dollar,,Euro,0.6439,
[/table]
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