The Euro to GBP exchange rate is trading close to its lowest-level in one-and-a-half-years as the single currency continues to be weighed upon by last week’s comments by ECB Governor Mario Draghi.
Against the US Dollar the Euro slumped close to its weakest-level in a month.
Sterling advanced against the Euro after the Confederation of British industry raised its growth forecasts. The Pound also found support from expectations that the Bank of England will hike interest rates early next year.
The CBI now forecasts that UK interest rates will rise from 0.5% to 0.75% in the first quarter of 2015.
The group also forecasts that growth will be 3% this year, up from its previous expectations for a figure of 2.7%.
“We’re sensing entrepreneurs across the whole economy – service, manufacturing, exporters – and even the domestic economy feeling more confident and making more investment,” said CBI director general John Cridland.
The Pound was also finding support from expectations that the Bank of England will increase its growth forecasts for growth at Wednesday’s inflation report.
The Euro continued to be weighed down by expectations that the ECB will introduce new monetary easing measures at next month’s policy meeting.
ECB Vice President Vitor Constancio said in a speech earlier today that the Euro’s recent strength has had an impact on the region’s economy and that the medium term inflation outlook will be the main criteria that the bank will use to implement new policy measures.
Eurozone inflation data for April is due for release on Thursday the 15th of May.
Euro to Pound update – 13/05/14
The single currency weakened to its lowest level in 16-months on Tuesday as investors raised their bets that the ECB will introduce new monetary easing measures in June.
The cause for the Euro’s decline was an article published in the Wall Street Journal which showed that the German Bundesbank is willing to back the imposition of new easing measures if this week’s Eurozone inflation data comes in weakly.
Euro to Pound Sterling is trading in the region of 0.8146.