Euro to Pound Sterling (EUR/GBP) Exchange Rate Stuck at 7-Year Low
After plunging beyond a seven-year low on Thursday in reaction to the Swiss National Bank’s (SNB) shocker, the Euro to Pound Sterling (EUR/GBP) exchange rate continued to struggle on Friday.
The EUR/GBP pairing shed 0.3% shortly after European markets opened and the common currency failed to derive any support from positive EU New Car Registrations data.
New car registrations were up 4.7% in December following November’s 1.4% increase.
Germany’s final inflation figures for December also had little impact as they were unrevised from previous estimates.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7638
Earlier…
EUR/GBP Exchange Rate Falls to 0.7634
As the European session progressed the Euro to Pound Sterling (EUR/GBP) exchange rate plummeted against almost all of its rivals in response to the news that the Swiss National Bank (SNB) removed its cap against the Euro.
The Euro shed over 27% against the Franc and lost around 0.7% against the US Dollar.
The SNB also cut its interest rate to -0.75%.
The central bank stated; ‘The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets. This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate. The economy was able to take advantage of this phase to adjust to the new situation.’
The shock move prompted this response from economist George Buckley; ‘It’s amazing that such a stoic central bank could end up abandoning such a long held policy with such short shrift. I thought we were out of the situation where central banks surprise so significantly as this.’
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed by more than 0.7% as trading continued, rallying above the 1.31 level to achieve a high of 1.3106
The Pound was also supported as a Reuters poll saw economists predict a Bank of England (BoE) interest rate hike taking place in the fourth quarter of 2014.
Economist Rob Wood noted; ‘With inflation heading close to, and possibly below, zero percent, the central bank faces absolutely no pressure to raise interest rates. They can safely sit back and wait to see if any of the theoretical risks of low inflation turn into practical problems. In our opinion, those theoretical risks are overblown.’
Earlier…
The Euro to Pound (EUR/GBP) exchange rate spent Wednesday trading around its lowest levels since 2008 as comments from Bank of England (BoE) Governor Mark Carney lent the Pound support.
EUR/GBP Exchange Rate Struggles after QE Hints
This week’s UK inflation data might have shocked investors and economists alike by printing at a 14-year low of 0.5%, but industry leaders don’t appear to be overly concerned by the development and the report did little to stymie the Pound’s uptrend against the Euro.
Although the Eurozone’s Industrial Production report surprised to the upside on Thursday, the EUR/GBP exchange rate held its recent decline and consolidated losses after Carney ruled out the prospect of further quantitative easing in the UK, just as the European Central Bank (ECB) prepares to deploy the measure.
Carney was quoted as saying; ‘although inflation is lower than the Bank expected [there is] no need for more monetary stimulus’.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7722
The UK’s RICS House Price report had little impact on the EUR/GBP currency pair.
According to RICS; ‘The number of potential new house buyers dipped for the sixth consecutive month in December and price growth fell to its slowest pace since May 2013. Across the UK, 10% more surveyors saw the number of potential new buyers decrease in December 2014. London saw the weakest demand, with 45% more surveyors reporting a decline in enquiries – the eighth consecutive monthly decline.’
However, they did add; ‘Despite the slowdown, there is optimism that the stamp duty reforms will deliver a 2-5% boost in both sales and prices over the next 12 months, despite members in London expecting sales to decrease by between 5-10% and prices to decrease by 2-5%.’
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a high of 1.2927
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
Economic reports for the UK are lacking today, but the Euro to Pound Sterling (EUR/GBP) exchange rate could experience volatility following the publication of Germany’s National Statistics Agency GDP estimate for 2014.
German public finance figures will also be of interest, as will the Eurozone’s trade balance report.
Towards the end of the week additional Euro movement could be occasioned by the final December Consumer Price Index figures for Germany and the Eurozone.
The declination in the Eurozone’s month-on-month figure is expected to be revised from -0.2% to -0.1%. If that proves to be the case the Euro may be modestly supported.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7735
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2925
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8501
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1756
