The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.50% on Friday morning.
After the European Central Bank initiated a programme of quantitative easing, in which €60 billion a month will be fed into the Eurozone, the shared currency slumped versus all of its major peers. Friday has seen those losses extended versus most of its rivals as traders price-in the aggressive stimulus measures.
The Pound, meanwhile, is finding support from the potential for cheaper trade with Europe. Retail sales data, due for publication later on Friday morning, is likely to cause Sterling volatility.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7527.
The Euro to Pound Sterling (EUR/GBP) exchange rate dived by around -1.11% on Thursday afternoon.
In the immediate aftermath of the announcement from European Central Bank (ECB) president Mario Draghi, who stated the bank plans to inject €60 billion Euros per month until September 2016 in order to counteract negative inflation. This was a more aggressive programme of quantitative easing than traders had priced-in.
The Pound Sterling, meanwhile, strengthened against most of its major peers as the ECB’s quantitative easing programme is likely to support cheaper trade.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7588.
Euro (EUR) Exchange Rate Softens on QE
ECB policymakers opted to begin an extensive programme of quantitative easing, adding €60 billion a month liquidity to the Eurozone. This caused the shared currency to slump across the board given that traders priced-in a smaller amount.
‘The combined monthly purchases of public and private sector securities will amount to 60 billion Euros,’ Draghi told a news conference. ‘They are intended to be carried out until end-September 2016 and will in any case be conducted until we see a sustained adjustment in the path of inflation.’
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7574 today.
Pound Sterling (GBP) Exchange Rate Gains on BoE’s Miles
The expansive programme initiated by the ECB has the potential to be Sterling supportive due to the prospect of increased liquidity cheaper trade. However, the Pound initially strengthened thanks to a speech by Bank of England (BoE) policymaker David Miles, who suggested inflation wasn’t a permanent concern. ‘One should not expect a central bank to be fully able to offset the impacts of such huge swings in commodity prices on current inflation,’ said Miles.
British data printed relatively poorly on Thursday, but the data had little impact on movement with all eyes looking towards the Eurozone.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Trend Lower
Given the lack of data to curb the trend, and given the ECB QE trumped most expectations, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to continue trending lower on Thursday.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high today of 0.7670.
