The Pound advanced against the Euro and US Dollar on Thursday as speculation increased that the debate as to whether will remain a part of the United Kingdom will have little impact upon the strength of the UK currency.
Over the past few weeks, Sterling has softened partly on concerns over the Scottish Referendum vote due to take place next month. Confusion as to what currency Scotland would use if it votes with its feet and leaves the 307-year-old United Kingdom weighed on sentiment towards the Pound.
‘I would not put the referendum out there as an issue that’s going to break the upward move in the Pound. Sterling will get stronger against the Euro and Japanese Yen,’ said Steve Barrow, head of G-10 strategy at Standard Bank Plc.
The GBP/EUR exchange rate firmed following a string of disappointing data releases out of the Eurozone and as concerns increased that the conflict in Ukraine is about to see a new escalation.
Hopes that the conflict between the Western back Ukrainian government and pro-Moscow Separatist rebels could end peacefully following a meeting between the Russian and Ukrainian President were dashed as heavy fighting erupted in the southeast.
Russian forces have been accused of direct intervention in what one Ukrainian military commander said was a ‘full scale invasion’.
According to reports Russian tanks, armoured vehicles and artillery crossed the border and reports of Russian soldiers fighting alongside rebels suggest that Russia is directly involved in the fighting.
“Russian supplied tanks, armoured vehicles, artillery and multiple rocket launchers have been insufficient to defeat Ukraine’s armed forces, so now an increasing number of Russian troops are intervening directly in the fighting on Ukrainian territory,” said US Ambassador to Ukraine Geoffrey Pyatt.
With the Eurozone already being negatively impacted by the conflict concerns are growing that harsher sanctions could be imposed on Russia by the USA and its allies, a move that economists see as harmful to the already fragile Eurozone economy.
The Euro was also under pressure from the release of data, which showed that the number of people out of work in Germany (the Eurozone’s largest economy) increased unexpectedly in August. Separate data for the wider region also showed economic and consumer sentiment fell more than expected.
Pound Sterling to Euro Exchange Rate Forecast
Sterling looks set to advance further against the Euro on Friday if the latest Eurozone inflation data comes in below expectations.
A dip from the already record low level of 0.4% will increase pressure upon the European Central Bank to introduce new monetary easing measures at next week’s policy meeting, a move that will weaken the single currency further.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6576 ,
Pound Sterling,,Euro,1.2583 ,
Pound Sterling,,Australian Dollar,1.7736 ,
Pound Sterling,,New Zealand Dollar,1.9786 ,
US Dollar,,Pound Sterling,0.6033 ,
Euro,, Pound Sterling ,0.7946 ,
Australian Dollar,, Pound Sterling ,0.5638 ,
New Zealand Dollar,,Pound Sterling,0.5056 ,
[/table]
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