Sterling may have recorded modest declines against the Euro yesterday as a gauge of economic sentiment for Germany advanced to a four-year high, but the British asset swiftly recouped losses today after minutes from the Bank of England’s latest policy meeting were published.
The Pound to Euro Exchange Rate is currently trading in the region of 1.1949 as of 15:35 GMT
Although the Pound experienced modest volatility in the immediate aftermath of the minutes’ release, with the Monetary Policy Committee united in the decision to hold rates at record lows and leave the level of bond-buying unchanged Sterling soon rallied.
As well as advancing on the Euro the Pound hit a three-week high against the US Dollar.
In the words of macro strategist Jeremy Hale; ‘The broad story supporting Sterling is still intact. While the minutes showed there was some discussion about not raising rates, I don’t think anyone particularly thought they would jump to hike anyway. It’s still clear that the economy has a lot of momentum and it’s clear that the direction for rates eventually is up.’
The GBP/EUR Exchange Rate hit a low of 1.1860
The Euro, on the other hand, softened modestly against its peers as it became apparent that German Chancellor Angela Merkel is no closer to forming a workable coalition Government.
Despite winning a landslide election victory a full eight weeks ago, ongoing disagreements between Merkel’s Christian Democrats and the SPD have prevented an accord being reached and some industry experts are worried that there might not be a government to swear in at Christmas.
If a coalition isn’t formed it could mean a re-election, and given that the Eurozone’s tentative return to growth was driven by Germany, signs of political instability in the super-power are a concern.
However, EUR/GBP losses were limited as the Euro garnered support from the expectation that tomorrow’s Eurozone and German manufacturing/services PMI will show improvement and that a gauge of consumer confidence in the Eurozone climbed.
Trade balance data for the UK will also impact the EUR/GBP pairing.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3531 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8368 <
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4430 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6249 >
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7389 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1949 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6931 <
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6155 <
(Correct as of 15:35 GMT)
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