Pound Sterling to Euro (GBP/EUR) Exchange Rate Climbs above 1.30 after Swiss Developments
The news that the Swiss National Bank (SNB) removed its cap against the Euro and lowered its interest rate saw the common currency plummet across the board.
The widespread declines in Euro helped the Pound Sterling to Euro (GBP/EUR) exchange rate climb by over 0.4% to briefly hit a high of 1.3041 during the European session.
The Euro also fell to a low of 1.1575
GBP/EUR Exchange Rate Holds Gain
The Pound Sterling to Euro (GBP/EUR) exchange rate pushed back above the 1.29 level on Wednesday in spite of the Eurozone’s industrial production report surprising to the upside.
Sterling was trending at around its strongest level against the Euro since 2008 thanks to comments issued by Bank of England (BoE) Governor Mark Carney.
Carney asserted that the Bank of England, unlike the European Central Bank (ECB), has no plans to introduce additional stimulus, and that the BoE won’t be expanding on its quantitative easing programme.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 77.33 pence.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2906.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate rallied by around 0.8% on Tuesday even as the UK’s inflation figure came in far below forecast levels.
The pairing held this advance on Wednesday as European Central Bank President Mario Draghi asserted that in order for the Eurozone to achieve price stability, the central bank must employ loose monetary policy.
The GBP/EUR currency pair posted a further gain of 0.3% even as industrial production in the Eurozone was shown to have increased by 0.2% on the month in November rather than stagnating as expected.
During an interview Draghi noted that the ECB has to ‘keep interest rates low and work towards an expansive monetary policy that accompanies growth’.
As it stands, the Pound Sterling to Euro (GBP/EUR) exchange rate is trading in the region of 1.2915
Earlier…
GBP/EUR Exchange Rate Pushes back above 1.2850
While the Pound Sterling to Euro (GBP/EUR) exchange rate initially softened following the release of the UK’s CPI data, underlying Euro weakness saw the Pound recoup losses as the European session progressed.
As stated by currency strategist Neil Mellor; ‘I suspect the real damage to the Euro was done with the deposit rate – that’s when the Euro really started motoring to the downside and QE, if anything, has been an added bonus. We might get a correction in the Euro if the program is not up to what we expect but ultimately the downtrend in the Euro is set.’
Some economists have argued that the inflation result put the ‘final nail in the coffin’ for the Bank of England (BoE) introducing interest rate hikes this year, but others have asserted that the development is unlikely to deter the BoE from making a move if the pace of growth in the UK is shown to improve in the months ahead.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.2883
The Euro to US Dollar (EUR/USD) exchange rate was also trending in the region of a nine-year low.
In the view of forex expert Matt Derr; ‘Given all of the ECB chatter, it is hard to see them not giving the market something next week, even if they need more time to iron out the details. And with the Greek election and the polls not moving much, it just adds to Euro weakness.’
Earlier…
GBP/EUR Exchange Rate Sheds 0.4%
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2773 after the UK’s inflation report was released, down 0.4% on the day’s opening levels.
It had been expected that the UK’s non-core CPI would fall to 0.7% as a result of declining oil prices, but it actually fell to 0.5% – the lowest level of inflation recorded since 2000.
The Pound Sterling to US Dollar (GBP/USD) exchange rate also declined, falling by more than 0.5%.
As stated by Barclays’ currency strategists; ‘A lack of UK inflation pressure and the associated risk of an extended period of unchanged BOE policy supports our view that diverging UK-US monetary policy will weigh heavily on GBP/USD over the coming year’.
Earlier…
Ahead of the publication of the UK’s inflation report, the Pound Sterling to Euro (GBP/EUR) exchange rate shed over 0.2%
GBP/EUR Exchange Rate Could Falter if Inflation Slows
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2792 as investors bet that today’s UK Consumer Price Index will show a marked slowing in consumer price gains.
The measure of annual non-core inflation is expected to fall from 1% to 0.7% in December, supporting earlier assertions from the Bank of England (BoE) regarding inflation trending below 1% over the next six months.
Demand for the Pound was also slightly limited by the British Retail Consortium’s (BRC) Like-for-Like sales report.
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.2822
Like-for-like sales had been expected to increase by 1.0% in December following November’s gain of 0.9%.
However, they actually dropped by -0.4%, marking the worst festive period for retailers since the onset of the global economic crisis in 2008.
According to Graham Ruddick of The Telegraph; ‘The spike in demand on Black Friday, which took place on November 28, disrupted online sales. As well as Black Friday bringing forward orders into November it caused a spike in demand that led to delivery services being disrupted. This led to consumers becoming concerned that if they bought products online they would not in time for Christmas.’
GBP/EUR declines were restrained by Germany’s Wholesale Price Index, which registered a -1.0% month-on-month decline in December and a -2.3% annual drop – down from previous figures of -0.7% and -1.1%.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
While the prospect of UK inflation falling to a 12-year low has been priced into the market to a certain extent, if CPI prints at 0.7% or lower the Pound Sterling to Euro (GBP/EUR) exchange rate could extend declines.
On a monthly basis, non core CPI is expected to have risen by 0.1% in December following a decline of -0.3% in November.
The slide in consumer price gains is largely due to the recent drop in the price of oil, but lagging inflation could prevent the BoE from increasing interest rates until towards the close of the year and so is a Pound-negative development.
The core measure of inflation is believed to have increased from 1.2% to 1.3% on the year in December.
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.2775
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7808
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2791
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5128
The US Dollar to Pound Sterling (USD/GBP) exchange rate is trading in the region of 0.6607
