GBP to EUR Exchange Rate Holds at 2-Year High on Draghi Comments
A speech given by European Central Bank President Marion Draghi has sent the Euro plummeting against the majority of its most traded currency competitors. Meanwhile, Sterling is holding steady ahead of Bank of England Governor Mark Carney’s speech in Wales later on Thursday afternoon.
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The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2812.
A complete lack of British data on Wednesday made it difficult for Sterling to rebound from the spate of profit-locking following the Unionist victory in the Scottish independence referendum. Sterling trended lower against the majority of its rivals after Prime Minister David Cameron called for British military action to tackle the current crisis in Syria and Northern Iraq.
Yet another set of disappointing German domestic data publications saw the single currency decline against the majority of its currency competitors. Both the German Business Climate and Expectations came in below the previous figure having failed to meet with the market consensuses.
The Pound Sterling to Euro exchange rate has hit a low today of 1.2768.
In a recent interview published on Thursday by the Lithuanian business daily Verslo Zinios Draghi stated; ‘According to the preliminary information received over the summer, economic conditions have been somewhat weaker than expected,’ Draghi was quoted as saying. ‘Overall, however, we expect modest growth in the second half of the year’. The Euro downfall can be attributed to Draghi’s promise of initiating further stimulus if necessary; ‘ We stand ready to use additional unconventional instruments within our mandate, and alter the size or composition of our unconventional interventions should it become necessary to further address risks of a too prolonged period of low inflation’.
Sterling is holding against the majority of its peers as traders await Bank of England Governor Mark Carney’s speech in Wales later on Thursday.
Forecast for the Pound to Euro Exchange Rate
If Mark Carney’s speech proves to have a hawkish overtone it is very likely that the Pound will make gains against all sixteen of its major currency rivals and sustain those gains over the weekend. The opposite could be true if the speech is dovish or avoids action towards normalising monetary policy.
Friday’s German data will be of importance for the single currency; especially given the recent succession of negative results from the currency bloc’s largest economy. The German GfK Consumer Confidence Survey is expected to fall from 8.6 to 8.5.
There will be other important economic events on Friday for those invested in the Euro. The ECB’s announcement of its 3-year liquidity-providing long-term refinancing operations will be of interest, especially considering the recent failure of the TLTROs. Also Luc Coene will be speaking at a lunch conference in Brussels, although it is likely that the speech will emulate Draghi’s speech on Thursday.
The Pound Sterling to Euro exchange rate has reached a high today of 1.2833.
The Pound to Euro exchange rate was trending around the 1.28 level on Friday.
While the Pound continued to derive support from yesterday’s comments from Bank of England Governor Mark Carney, the Euro came under pressure as the German GfK Consumer Confidence Survey for October showed a steeper decline than anticipated.
The gauge fell from 8.6 to 8.3.
This was the latest in a series of below-forecast sentiment reports for the Eurozone’s largest economy and adds to fears that Germany could be entering a period of stagnation or contraction.
The GBP/EUR exchange rate is likely to enter the weekend trading strongly.