- EUR GBP Exchange Rate Jumps – Chancellor’s QE Comments Weigh on Pound.
- Euro Reels From Poor Data – German consumer confidence disappoints.
- Draghi Speaks in Germany – Euro likely to slide on further stimulus talk.
- UK GDP – Pound may advance if tomorrow’s data impresses.
The EUR GBP exchange rate rocketed up by around 1% yesterday afternoon following comments from British Chancellor Philip Hammond on the potential of further monetary stimulus.
Euro (EUR) Batters Pound (GBP) Following Chancellor’s QE Comments
The Euro (EUR) was able to advance against the Pound (GBP) yesterday as the UK Chancellor said that we was willing to authorise further quantitative easing from the Bank of England (BoE) should they feel it was necessary, saying that;
‘No request for quantitative easing has ever been refused, and I can’t see why it would be different in future.’
This comes just before the BoE is due to meet for its latest rate decision and has led to investors speculating on whether the bank will announce a further loosening of monetary policy next Thursday.
The Pound was able to push back against the Euro a little later however as market sentiment improved following BoE Governor Mark Carney’s appearance before the House of Lords to discuss the state of the UK economy in the wake of ‘Brexit’.
Investor confidence was bolstered as Carney avoided any talk that the bank may introduce additional financial stimulus next week.
Disappointing German Consumer Confidence Data Hinders Further Gains for Euro
The Euro slid against Sterling this morning as the latest German GfK consumer confidence survey unexpectedly dropped to 9.7 for November after it was forecast to hold at 10.
This was the largest monthly drop since October 2015 and comes despite economic prospects rising for the first time in four months, with GfK largely attributing the fall to the consequences of an increasingly difficult external trade environment.
The Euro was also pressured by UK domestic data, with the British Banking association reporting a rise in the number of loans for house purchases as mortgage approvals topped 38.3k in September, surpassing predictions that it would only reach 36.6k.
ECB Stimulus Speculation May Weigh on Euro (EUR) following Draghi Speech
The Euro Pound (EUR GBP) exchange rate may find itself under pressure from recent comments from European Central Bank (ECB) President Mario Draghi.
Draghi was forced to defend the central bank’s ultra-loose monetary policy yesterday as he spoke in Berlin. He faced disgruntled German lawmakers who blame the ECB bond-buying for causing problems for German banks and placing additional financial weight on households.
Mr Draghi rejected these claims however as he doubled down on his commitment that the ECB would not alter its policies until its inflation target has been met.
The comments helped to fuel speculation that the bank may be planning to extend its bond-buying programme past March 2017, and are likely to drag on the Euro in the coming months.
EUR GBP Exchange Rate Forecast: Pound May Jump if GDP Data Impresses
The EUR GBP exchange rate may falter tomorrow if the UK’s GDP report comes in better than expected. Britain’s GDP is currently predicted to hold at 2.1% in the third quarter, but a surprise rise could allow the Pound to recover some of its recent losses.
Looking to the end of the week the Euro is likely to apply additional pressure on Sterling as the German CPI report is forecast to show a slight rise from 0.7% to 0.8%, although an unexpected dip could see the Pound rally.
Current Interbank Exchange Rates
At the time of writing the EUR/GBP exchange rate was trending around 0.89 and the GBP/EUR exchange rate was trending around 1.11.