Pound to Euro (GBP/EUR) Exchange Rate Dips on European Data
The Pound to Euro (GBP/EUR) exchange rate is presently trading higher on Wednesday, in the region of 1.2499. Sterling has seen gains from positive statements made by the Bank of England Governor Mark Carney on Wednesday and Thursday. Meanwhile the Euro has tumbled in its exchange rates as Investor Confidence tumbled on Monday and others fear for the Eurozone recovery.
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The Pound has faced a massive amount of speculation of late with the upcoming Scottish Referendum drawing ever closer. A large portion of the debate has been regarding whether an independent Scotland could feasibly continue using the Pound in the event of a break away from the UK. Before now politicians from both Scotland and the UK have fought hard over the topic; however, Governor Carney has stated that Scotland’s wish to use Sterling would not be possible. Carney stated: ‘That’s just the economics of it.’
Carney also stated that Scotland would need to raise anywhere between £10bn and £100bn in reserves to allow its own financial banking sector. Carney asserted: ‘Countries which run successful currency sharing generally have large reserves.’
In upcoming data releases for the Pound to Euro exchange rate, Thursday will prove influential by way of domestic Eurozone data. The German Consumer Price Index is scheduled for release early on Thursday, followed by the European Central Bank’s Monthly Report.
Friday however, will see the Eurozone Employment and Industrial Production numbers reach publication; meanwhile, the UK will only see the publication of Construction Output on Friday, concluding its data releases for the week.
As the Eurozone recovery has been flat lining for some time, investor’s sentiment has waned on the announcement that the European Central Bank has slashed borrowing costs to historic lows of 0.05%, whilst also beginning the purchase of asset backed securities.
The UK economic recovery however, has fared much better. Carney has inspired some hope in his optimistic statements which have asserted that interest rate hikes are currently forecast to take place in spring, whilst wages are predicted to rise shortly after.
Carney stated: ‘With inflation at 1.6%, continuing downward pressure from the appreciation of Sterling, and with slack remaining, the current inflation environment is benign. But it will not remain benign if we do not increase interest rates prudently as the expansion progresses.’
The Pound to Euro exchange rate is currently trending in the region of 1.2557.
The single currency has managed to make slight gains on the Pound on Thursday after European data met with the forecast figures. The German Consumer Price Index – EU Harmonised printed at 0.8% and the German Consumer Price Index also printed at 0.8%.
The solitary British economic publication on Thursday was less impressive than the European data. RICS House Price Balance was forecast to hit 47% having registered a score of 49% previously, but the actual data was a decline to 40%.