EUR/GBP Recouping Ground as Pairing Recovers after ECB Remarks
The Euro Pound (EUR/GBP) exchange rate is showing signs of life again this morning after falling sharply yesterday as central bankers decried the strength of the Euro.
EUR/GBP climbed around 0.22% this morning, but still remain well below Wednesday’s best levels.
Euro (EUR) Weakens as ECB Expresses Concern over Recent Strength
The Euro found itself retreating late on Wednesday as a second European Central Bank (ECB) policy maker expressed concerns over the recent strength of the single currency.
Following on from comments by ECB Vice-president, Vítor Constâncio on Tuesday, in which he said he was ‘concerned’ about the sudden jump in the Euro, ECB policymaker Ewald Nowotny told reporters yesterday that the recent jump in EUR/USD is ‘not helpful’.
The Euro has risen roughly 2% against the US Dollar (USD) since the start of the year, mostly on USD weakness but also due to the Eurozone’s recent economic performance and speculation that the ECB may seek to speed up its monetary tightening in 2018.
ECB officials have attempted to downplay this speculation over the last week, but it has not prevented markets from take an increasingly hawkish stance towards the ECB’s plans this year.
The ECB will meet next week for its first policy meeting of the year.
Analysts had previously forecast that the bank would announce plans to further reduce its bond-buying programme this month, however they now believe this is more likely to take place in March when the bank receives its latest assessment reports.
Pound (GBP) Slides as Stamp Duty Cut Fails to Increase UK House Sales
Meanwhile the Pound has been forced to relinquish some of Wednesday’s gains this morning as markets react to a report from the Royal Institution of Chartered Surveyors (RCIS).
The report analyses the impact of the UK government’s recent stamp duty cut on UK house sales, revealing that sales have not risen as hoped.
The government announced the changes in an attempt to help first-time buyers on the property ladder.
However today’s survey reveals that this appears to have failed as existing home owner take advantage of the move by rising prices instead.
Simon Rubinsohn, Chief Economist at RICS, said;
‘The initial feedback from the market doesn’t suggest that the change in the Stamp Duty regime announced in the budget is going to have a material impact on activity.’
EUR/GBP Forecast: Cœuré Comments to Undermine the Euro?
Looking ahead the EUR/GBP exchange rate may stumble again later this afternoon as the ECB’s Benoît Cœuré speaks in Frankfurt, with any suggestion that he supports his colleague’s recent remarks regarding the strength of the Euro likely to prompt some weakness in the single currency.
Meanwhile Sterling may be forced to retreat again on Friday with the publications of the UK’s latest Retail Sales figures as economists forecast that sales growth will have slumped in December.