Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fall, ECB Action Seems Likely after TLTRO Take-up
The Pound Sterling to Euro (GBP/EUR) exchange rate tumbled during Thursday’s session after the European Central Bank (ECB) increased speculation that it would be initiating a period of quantitative easing (QE) in January, after a rather flat Targeted Long-Term Repayment Operation (TLTRO) take-up.
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ECB Speculation Props Up Euro (EUR) Exchange Rate
After recent statements from ECB President Mario Draghi that the central bank would be reviewing monetary policy in January, hints that QE is on the cards have become more frequent. However, Germany is extremely reluctant to undergo a period of QE—a stance that has placed the ECB in a very difficult position.
Analyst Naeem Aslam commented: ‘The results of this has made the job a lot more easier for Draghi, who has [talked] several times about adding corporate bonds and sovereign bonds to their shopping list. After these results he will have to face less resistance from opposition such as Germany.’
The TLTRO package offered banks cheap loans in an attempt to boost lending in the currency bloc’s real economy. The ECB suggested that this stimulus measure could help to push its balance sheet 1 trillion Euro’s higher.
Meanwhile, the Bank of England (BoE) announced that it is to begin allowing greater transparency surrounding interest rate hikes. The Monetary Policy Committee (MPC) will now publish its full unedited meeting minutes eight years after the event takes place—a procedure similar to that of the US Federal Reserve who releases its own reports after five years.
In addition, the BoE will publish its minutes faster and cut its number of policy meetings to eight per year.
Bank of England Governor Mark Carney also recently suggested that interest rate hikes will take place despite a forecast dip in inflationary levels. The central banker stated that ‘interest rates will have to increase’ in order for inflation to improve.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
The Pound Sterling to Euro (GBP/EUR) exchange rate may fluctuate on Friday with the release of Eurozone Industrial Production figures. The UK will release its mildly influential Construction Output figures, which could encourage some GBP/EUR movement.
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.2599, falling by -0.18% on the day’s opening levels. The Euro to Pound Sterling (EUR/GBP) exchange rate is reaching 0.7940.