GBP/EUR Exchange Rate Weaker ahead of BoE Rate Decision
Sterling has steadily declined against the majority of its most traded currency rivals on Wednesday which is likely a result of the hangover from dovish speeches made by UK officials earlier in the week. A complete absence of European data has actually been beneficial for the single currency, which has gained against the majority of its high-yielding rivals.
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The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2705.
Several comments regarding inflationary pressures have stymied Sterling gains over the past few days. The decline was initiated by Bank of England Deputy Governor Ben Broadbent who stated last week that issues with inflation is stifling economic growth. Those views were parroted by the newest BoE policymaker Kristin Forbes.
On Tuesday of this week Sterling took another hit from Business Secretary Vince Cable who suggested that inflationary pressures were as a result of an overvalued Pound. By stating that the Pound was around 10-15% higher than it ought to be, Cable boosted negative sentiment towards Sterling.
Tuesday’s relatively positive domestic data publications weren’t enough to overshadow overvaluation concerns.
Tuesday’s European data indicated yet more declination for the currency bloc’s most powerful economy. Yearly German Industrial Production was forecast to contract by -0.5%, having registered a score of 2.7% previously, but the actual data revealed a reduction of -2.8%.
A succession of disappointing German economic data publications has spelt disaster for an already flagging single currency.
The Pound Sterling to Euro exchange rate has hit a low today of 1.2679.
Wednesday’s British data has printed reasonably positively but not enough to tempt traders into Sterling investment.
The 3-monthly Halifax House Price report met with the market consensus of a fractional decline in prices from 9.7% to 9.6%. The monthly score, however, indicated that house prices had risen beyond the median market forecast of 0.2% by climbing 0.6%.
A slight declination in the BRC Shop Price Index could be a partial contributor to Sterling losses. The data indicated that shop prices fell from -1.6% to -1.8%.
A complete absence of European data on Wednesday has actually been beneficial for the single currency. As markets react to disappointing Chinese data and slower global growth the Euro has appreciated against many of its major peers.
Forecast for the Pound to Euro Exchange Rate
Thursday will be a pivotal day for those invested in Sterling and the Euro.
The European Central Bank is due to publish its monthly report which has the potential to provoke volatility. Any sign of a quantitative easing rhetoric is likely to see the single currency depreciate.
In terms of British data, the BoE Asset Purchase Target and Rate Decision could spark Sterling movement.
The Pound Sterling to Euro exchange rate has reached a high today of 1.2721.
The Pound was weaker against all of its major peers expect the US Dollar on Thursday as economists increased their bets that the Bank of England will leave rates unchanged and be more dovish due to the recent run of soft economic data releases.
BoE policy makers are expected to leave interest rates on hold at the record low level of 0.5% and leave its monthly bond-buying programme at £375 billion.
The Euro was able to rise despite the release of more disappointing data from Germany and France.
Concerns over the region sliding back into recession are also weighing on sentiment towards the currency.