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EUR/GBP, EUR/USD, Exchange Rates Rally as ECB Refrains From New Stimulus


The Euro to Pound Sterling (EUR/GBP) exchange rate rallied on Thursday after the European Central Bank (ECB) stopped short of introducing new stimulus measures and as ECB President Mario Draghi announced that policy makers would consider new stimulus measures in the next quarter.

Sterling was weakened after the Bank of England left interest rates unchanged at the record low level of 0.5% and left its monthly quantitative easing programme at £375 billion. The decision was expected by economists but it will not be for another two weeks until we see whether the vote to leave rates unchanged was unanimous or not.

‘The current period of subdued inflation pressures is dictating the path of UK monetary policy and low inflation seems likely to persist as we head into early 2015. We do not envisage an interest rate until well into the second half of next year,’ said Mark Miller, an analyst from the UK’s Economist Intelligence Unit.

As the session progressed, the single currency strengthened as, Mario Draghi reduced market speculation that the central bank was preparing to introduce new quantitative easing measures in order to stimulate growth and tackle the threat posed by low inflation.

The ECB left interest rates unchanged at the record low level of 0.05%

Draghi stated in a press conference that followed the rate announcement that recent declines in global oil prices could aid growth in the Eurozone economy but warned that inflation is likely to weaken further.

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast

The Euro to Pound Sterling is forecast to give up Thursday’s gains over the coming sessions as concerns over the weakness of the Eurozone and deflation will likely pile pressure back onto the currency pair.

‘You are likely to see some profit taking on short Euro positions given the absence of a signal that the ECB will do more in the near future. I do not think it will lead to significant moves higher though. The inflation outlook in the Euro area is so dire that is becoming inconceivable for the ECB to refrain from undertaking QE in coming months,’ said Peter Kinsella, senior currency strategist at Commerzbank AG.

Friday will see the publication of the latest Eurozone Gross Domestic Product (GDP) second estimate for the third quarter of the year. If the data shows some improvement the Euro will find support, however a worse than expected report will send the currency lower.

Euro Exchange Rates:

[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,,US Dollar,1.2363 ,
Euro,,British Pound,0.7899 ,
Euro,,Australian Dollar,1.4766 ,
Euro,,Canadian Dollar,1.4083 ,

As of 14:35 pm GMT