The Euro to Pound Sterling Exchange Rate was trading at 0.8567 as of 14:52 pm GMT
They say the pen is mightier than the sword, but it seems that European Central Bank President Mario Draghi might be more powerful than both items combined.
The Euro experienced its most significant drop for seven months yesterday – all thanks to the central bank chief.
After holding rates at their current level Draghi’s speech explaining the decision booted the currency backwards in a big way.
Draghi, who had previously stated that exchange rates shouldn’t be a central bank concern, shocked industry experts when he directly referred to the Euro’s potentially detrimental strength. Draghi commented that the recent gains in the common currency increased the risk of inflation slowing and could prove damaging to the economic growth of the Eurozone.
The ECB President stated: ‘The exchange rate is not a policy target, but it is important for growth and price stability. We want to see if the appreciation is sustained, and if it alters our assessment of the risks to price stability.’
Although some economists believe that Draghi’s words will be enough to keep the Euro at bay for the time being others are not so confident.
Danske Bank economists referred to the ECB as the ‘master of verbal intervention’, and was quoted as saying that the central bank’s president had been able to ‘dampen recent de facto tightening without taking any action, much as was the case with the OMT program, which has so far managed to lower Spanish and Italian bond yields without buying a single bond’.
Another industry expert added: ‘This was a deft verbal intervention on the part of the ECB president. He managed to talk down the Euro while talking up the Eurozone.’
However, the head of economic research with Daiwa Capital markets asserted: ‘Exchange-rate comments can be successful for as long as they’re thought to be credible, so long as markets believe the ECB will change policy if the Euro gets too strong. I’m not overly convinced that the ECB will get to a position where it will think about easing policy to offset the exchange rate.’
Immediately after Draghi’s announcement the Euro declined by 0.7 per cent against the Japanese Yen and 0.6 per cent against the US Dollar. In the interim the common currency has continued to fall, and is currently trading within easy reach of a five-week low against its American rival.
The Euro dropped for a third day against a broadly strengthening British Pound, with Sterling heading for its biggest weekly gain against its European counterpart for two years.
The common currency has also fallen notably against the Japanese Yen as the safe-haven currency posted hefty gains against the majority of its most traded peers.
Euro Exchange Rates
As of 14:52 pm
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8476
The Euro to US Dollar exchange rate is currently trading in the region of 1.3383
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2976
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.6007
The Euro to Canadian Dollar exchange rate is currently trading in the region of 1.3353
The Euro to Emirati Dirham exchange rate is currently trading in the region of 4.9136
The Euro to Swiss Franc is currently trading in the region of 1.2268
The Euro to Japanese Yen exchange rate is currently trading in the region of 123.9150
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