The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.21% on Thursday morning.
Although the actual European Central Bank (ECB) rate decision won’t see policymakers bring anything new to the table, many expect that the following press conference will see President Marion Draghi give definite timing as to the launch of quantitative easing. It will be of interest to see whether the ECB feels it can fund the operation given the lack of bonds to purchase. The shared currency is generally trending lower versus most of its major competitors.
The Pound, meanwhile, fluctuated versus its major peers ahead of the Bank of England (BoE) rate decision. Although most experts don’t expect any changes to the cash rate, hawks will be hoping for any sign as to the timing of the first rate increase.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7243.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate softened by around -0.32% on Wednesday morning.
European data had minimal impact on the shared currency on Wednesday. This is due to mounting speculation that the European Central Bank (ECB) will be unable to source enough bonds to fund the €1 trillion injection into the Eurozone.
The Pound, meanwhile, edged lower versus many of its major peers after domestic data failed to impress. With the headline figure for the Services PMI somewhat misleading, however, the Pound’s declination had been laboured.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7254.
Euro (EUR) Exchange Rate Softens ahead of Quantitative Easing
As mentioned above, speculation is building with regards to ECB President Mario Draghi’s difficulty in sourcing the required bonds to fund quantitative easing. ‘So Draghi faces an interesting conundrum, as he peruses his telephone book to work out who to call to deliver the QE that markets so desire. Of course, prices move and regulations change, as does investor behaviour. But on the face of it, the ECB president is going to have to work his phone pretty hard in coming months,’ stated Richard Dunbar writing for CityAM.
European data had minimal impact on the common currency, although there are some positive signs for long-term investors. In particular, Eurozone Retail Sales impressed, having risen by 3.7% on the year; eclipsing the median market forecast of a 2.3% increase in sales.
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low today of 0.7234.
Pound Sterling (GBP) Exchange Rate Edges Lower on Disappointing Data
British data failed to impress on Wednesday, which caused the Pound to soften. The British Retail Consortium’s (BRC) Shop Price Index saw prices drop by -1.7%; a larger declination than the -1.2% market consensus.
The headline figure for the Services PMI showed a drop from 57.2 to 56.7, but growth is still considered positive, as Group Chief Executive Officer at the Chartered Institute of Procurement & Supply David Noble explains; ‘The services sector has a spring in its step as it continues on a firm footing in February. Sharper growth in new business has been driven by an upward swing of activity in both the domestic and international markets, with a mix of new business and higher levels of interest from existing customers showing an overall improvement.’
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses
Given that the ECB is due to launch quantitative easing very soon, the speculation surrounding a lack of bonds to finance the operation is weighing heavily on investor confidence. Therefore, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold losses for the rest of Wednesday’s trade.
Thursday will see ECB/GBP volatility with several important European data publications due out and the Bank of England (BoE) due to make its interest rate decision.
The Euro to Pound Sterling (EUR/GBP) exchange rate has reached a high today of 0.7281.
