GBP/EUR exchange rate slips ahead of BoE meeting
The pound euro (GBP/EUR) exchange rate is stumbling this morning ahead of the Bank of England’s (BoE) looming interest rate decision.
At the time of writing the GBP/EUR exchange rate is trading at around €1.1837, down roughly 0.3% from this morning’s opening rate.
Pound (GBP) to sink following BoE rate decision?
The pound (GBP) is retreating against the majority of its peers this morning as investors await the BoE’s interest rate decision this afternoon.
Ahead of the central bank’s August meeting, interest rate cut bets were firmly on knife’s edge, with the odds of a rate cut floating around 50%. However, with a spur of last-minute bets, the odds have increased to roughly 60%, undermining Sterling sentiment before the meeting.
Professor Andrew Angus at Cranfield School of Management commented:
‘The current economic growth presents the Bank of England with an interest rate paradox. One reason for the economy’s stronger than expected performance is the expectation that rates will fall this Thursday… But persistent challenges, such as rising wages and strong service sector prices, could push the Monetary Policy Committee to be more cautious. It’s a Catch-22 situation: if the BoE doesn’t follow through, it could send shockwaves through the market.’
Looking ahead, should the BoE reduce rates from 16-year highs of 5.25% to 5% this afternoon, the pound is likely to tumble against the majority of its peers as a result.
Euro (EUR) to trade directionless?
Although up against the pound, the euro (EUR) is slipping against the majority of its peers this morning following a duo of underwhelming economic data releases.
The Eurozone’s finalised manufacturing index came in at 45.8 in July and remained in the contraction zone (a reading below 50).
The latest index marked the fourteenth consecutive month of decline in the sector, undermining EUR exchange rates.
Furthermore, an unexpected increase in the latest unemployment data further weighed on the euro, as the index rose from an all-time low of 6.4% up to 6.5%.
Looking ahead, the common currency is likely to trade without a clear trajectory, as data from within the Eurozone will be absent from the rest of this week’s data calendar.
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