The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 1.0% on Friday thanks to Draghi’s dovishness.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Rises to 1.2637
Although the Pound was struggling against several of its currency counterparts in the wake of UKIP’s by-election victory, the GBP/EUR exchange rate was able to extend gains over the course of the day and brush a high of 1.2637 before the close of the European session.
In the opinion of currency strategist Jane Foley; ‘The Euro will go progressively lower. Draghi is continuing to apply this level of urgency about needing to boost inflation and the implication of that, once again, may be that he is a proponent of potentially using full-blown quantitative easing.’
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending 0.6% higher in spite of the Pound coming under pressure of its own on Friday.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Brushes 1.26
As the European session progressed the Pound Sterling to Euro (GBP/EUR) exchange rate moved to within touching distance of the 1.26 level despite the Pound softening against other rivals in response to UK political news.
With the UK general election, UKIP winning its second parliamentary seat spooked investors and the Pound fell against peers like the US Dollar and Australian Dollar.
According to strategist Kit Juckes; ‘A swing toward a party which is committed to leaving Europe and which could conceivably represent the balance of power is immensely significant. It will be perceived as adding to uncertainty about the UK’s membership of the EU. If the UK were to leave the EU, our view is that would be negative for Sterling’.
However, the GBP/EUR pairing remained bullish.
The improvement in the UK’s public sector borrowing data also supported the Pound.
Earlier…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Trends higher on UK Sales Report
The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened on Thursday following the publication of better-than-expected UK retail sales data.
The 0.8% month-on-month increase was almost double the gain expected and helped the Pound strengthen beyond 1.25 against the Euro during the European session.
GBP/EUR gains were also encouraged by the Eurozone’s concerning Manufacturing, Services and Composite PMI’s for its largest economies.
To add insult to injury, later in the session the Eurozone’s Consumer Confidence Index registered an unexpected decline.
The gauge had been expected to improve from -11.1 to -10.7 in November, but it actually extended losses to -11.6.
Economist Howard Archer said of the result; ‘There is no breakdown available yet of Eurozone consumer confidence in November, so it is not possible to ascertain at this stage why confidence fell anew. However, evidence from both the Netherlands and Belgium suggest that consumers became significantly more worried in November about the economic situation and outlook. Despite dipping to a nine-month low in November, the European Commission’s consumer confidence index is still modestly above its long-term average, although the situation does vary markedly between countries.’
However, bets that the Bank of England (BoE) will refrain from increasing interest rates until the second half of next year prevented the Pound from really pushing its advantage against the Euro.
Dovish Draghi causes Euro Sell Off, GBP/EUR Gains
On Friday the Pound Sterling to Euro (GBP/EUR) exchange rate advanced over the course of the European session as investors reacted to a dovish speech from European Central Bank President Mario Draghi.
Draghi stated; ‘We will continue to meet our responsibility—we will do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us. If on its current trajectory our policy is not effective enough to achieve this, or further risks to the inflation outlook materialize, we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases.’
The Pound Sterling to Euro (GBP/EUR exchange rate achieved a high of 1.2562 after Draghi’s speech.
Pound Sterling (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,1.5634,
Pound Sterling,,Euro,1.2545,
Pound Sterling,,Australian Dollar,1.8162,
Pound Sterling,,New Zealand Dollar,1.9907,
US Dollar,,Pound Sterling,0.6373,
Euro,,Pound Sterling,0.7971,
Australian Dollar,,Pound Sterling,0.5503,
New Zealand Dollar,,Pound Sterling,0.5021,
[/table]
