The Pound (GBP) to Euro (EUR) exchange rate advanced back above the 1.26 level on Wednesday meaning that the UK currency has regained the vast majority of ground it lost earlier in the week on concerns over the Scottish Independence referendum.
Sterling also made solid gains against the US Dollar (USD), Australian Dollar (AUD),New Zealand Dollar (NZD), Swiss Franc (CHF) and most other currencies after three opinion polls published on Tuesday night showed that the anti-independence No campaign has a lead over its rival Yes to independence campaign.
The polls showed that the No side was leading by 52% to 48%. Despite the lead for the No side the number of undecided voters could still tip the balance to favour both sides.
‘The market has gone back to 90% pricing a No vote, On the day itself there are lots of factors that make it unpredictable.,’ said an economist from Deutsche Bank.
Wednesday’s session also bolstered the Pound due to the publication of positive employment data.
According to the Office for National Statistics, the number of UK citizens claiming unemployment benefits declined more than forecast in August. The total number of claimants fell by 37,200, beating expectations for a drop of 30,000. The data means that the number of claimants fell below the 1 million mark.
The nation’s overall unemployment rate also declined to its lowest level since December 2008. The rate dipped to 6.2%, beating expectations for a fall to 6.3%. Wage growth too also improved slightly but remains well under the inflation rate.
A separate report released by the Bank of England (BoE) showed that policy makers voted unanimously in favour of keeping the monthly quantitative easing programme unchanged. The minutes also showed that members Martin Weale and
Ian McCafferty voted for the second consecutive time to raise interest rates to 0.75% from a record-low 0.5%.
The Euro was little changed by better than expected Construction Output and inflation data as the markets focused on events in the UK and Ukraine.
Against the US Dollar, the Pound was able to advance after the latest US Consumer Price Index data showed a surprise decline. In a report, the Labor Department said that the U.S. consumer price index fell 0.2% in August, pulling the annual rate of inflation down to 1.7% from 1.9% in July.
Pound to Euro (GBP/EUR) Exchange Rate Forecast
The Pound is forecast to experience volatility against all of its major peers on Thursday as the Scots take to the polls.
Euro Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2963 ,
Euro,, Pound Sterling,0.7931 ,
Euro,,Australian Dollar,1.4310 ,
Euro,,Canadian Dollar,1.4202 ,
Pound Sterling,,Euro,1.2607 ,
US Dollar,,Euro,0.7704 ,
[/table]
