The Pound Sterling to Euro (GBP/EUR) exchange rate remained bearish in the latter half of Thursday’s training, but managed to regain some strength after the Bank of England (BoE) announced it was going to keep interest rates stable.
Economist Howard Archer commented: ‘The Bank of England has stressed the importance of looking through recent and likely further near-term very weak inflation developments resulting from sharply reduced oil prices and focusing on the medium-term inflation outlook, which suggests an interest rate hike late on in 2015 remains a very real possibility.’
Earlier… The Pound Sterling to Euro (GBP/EUR) exchange rate fell during Thursday’s trading while the Pound Sterling to Swiss Franc (GBP/CHF) exchange rate recorded gains.
The Euro is experiencing an interesting day on Thursday amid Greece negotiations, ECB movements and a raised Eurozone growth forecast. The European Union raised growth predictions for the Eurozone in 2015 to 1.3%.
However, it also suggested that deflation would be a problem for the 19-nation currency bloc as oil prices continue to tumble. In addition, 2015 is expected to see consumer prices drop by 0.1%.
The European Central Bank (ECB) recently took steps to encourage growth in the flat lining Eurozone by announcing it would embark on a period of quantitative easing (QE) starting in March.
European Commission representative Pierre Moscovici stated: ‘Europe’s economic outlook is a little brighter today than when we presented our last forecasts. The fall in oil prices and the cheaper Euro are providing a welcome shot in the arm for the EU economy.’
‘Meanwhile, the Investment Plan for Europe and the ECB’s important recent decisions will help create a more supportive backdrop for reforms and smart fiscal policies. But there is still much hard work ahead to deliver the jobs that remain elusive for millions of Europeans.’
However, Greek exit fears are rising again after the European Central Bank reduced Greece’s access to liquidity amid attempts to renegotiate debt. The ECB raised the cap on emergency funding by 10B Euros.
Since the ECB action, the Greek government has come out to say it will not be blackmailed—the move by the ECB has been deemed aggressive by many economists as the central bank wasn’t expected to take any action until later in the month.
Meanwhile, the Pound was relatively unchanged after the Bank of England (BoE) announced its benchmark interest rate would remain at 0.50%. The move didn’t surprise economists after the January meeting minutes revealed the entirety of the Monetary Policy Committee (MPC) was united in the view to keep borrowing costs on hold.
UK Trade Balance ecostats will be out on Friday and could offer the Pound Sterling exchange rate moderate movement.
Swiss Consumer Confidence Rises – CHF/GBP Exchange Rate Remains Bearish
Meanwhile, Thursday saw Swiss SECO Consumer Confidence rise from -11 to -6 in January, instead of sinking lower to -13 as forecast. However, analysts have predicted that economic growth will slow down in 2015 after the recent Swiss National Bank (SNB) announcement to relinquish ties between the Euro and the Swiss Franc (EUR/CHF).
SECO stated: ‘The effects of mid-January don’t seem to have affected either the perception of the household financial situation or the outlook for savings. As a result of the sharp appreciation of the Franc, manufacturing companies in Switzerland are suffering from a significant loss of price competitiveness and a higher level of uncertainty.’
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast
The Euro exchange rate could be affected by ECB officials speaking throughout Thursday’s session as well as the ongoing talks between Greece and the Troika.
Friday will see the release of German Industrial Production figures as well as the Swiss Retail Sales stat.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3357. The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is residing at 1.4151. The Euro to Swiss Franc (EUR/CHF) exchange rate is hovering in the region of 1.0595.
