Pound (GBP) Sinks as Mark Carney Hints at Interest Rate Cut
Bank of England (BoE) Governor Mark Carney has, in characteristic fashion, caused Pound Sterling to slide deeper into negative territory. Testifying to MPs, Carney hinted at the possibility that the next move by the Monetary Policy Committee (MPC) could be to cut UK interest rates.
GBP/EUR Down -1.4% as Citi Predict 30-40% Risk of ‘Brexit’
Citi have increased the odds on the UK voting to leave to EU to between 30-40%, up from 20-30% previously. The news comes as the Pound falls to a 22-month low against a basket of currencies and institutions such as HSBC line up to issue dovish predictions over the impact of a ‘leave’ vote. Sky predicts that up to half of FTSE 100 businesses will sign an open letter claiming that Britain is better off remaining in the EU.
Despite overall weak Eurozone PMI reports, the Pound to Euro (GBP/EUR) exchange rate is currently bullish on ‘Brexit’ fears. Pound Sterling has crashed following an announcement by London Mayor Boris Johnson that he will campaign to leave the European Union.
Below-Forecast PMIs Sink Euro, but Pound Weakness Causes EUR/GBP to Soar
A run of disappointing PMIs for the Eurozone has caused the Euro to sink across the board, except against Pound Sterling. The common currency is currently down -0.4% against the US Dollar (USD), -0.5% against the Australian Dollar (AUD), -0.9% against the New Zealand Dollar (NZD) and -1% against the South African Rand (ZAR).
The slump comes after the release of Markit PMIs which showed that the French economy contracted in February, according to a preliminary estimate which shows the index has fallen from 50.2 to 49.8, signalling a marginal fall in activity. A better-than-expected rise from the Manufacturing PMI was countered by an unexpected drop in the Services index. The German manufacturing and composite indexes also performed poorly, sliding further-than-forecast towards a no-growth score of 50, with the manufacturing index barely registering any growth at all in February.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading in the region of 0.7829.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Crashes after Boris Pledges Allegiance to ‘Leave’ Campaign
The Pound is on track to hit its lowest level against the Euro in 11 months after London Mayor Boris Johnson has announced that he will campaign to leave the European Union. The decision has shocked many and seen investors desert the UK currency as the odds of a ‘Brexit’ increase. A Guardian poll recently found that Boris Johnson was the second most influential figure for respondents in deciding how to vote, after David Cameron. Theresa May, who also surprised pundits by announcing that she would support the ‘Stay’ campaign, was tied in third with George Osborne, marginally ahead of Labour leader Jeremy Corbyn.
The news has caused Pound Sterling exchange rates to crash against the major currencies, with GBP falling -1.3% against the Euro and -1.7% against the US Dollar (USD) and the Canadian Dollar (CAD). Sterling’s biggest losses have been -2% against the New Zealand Dollar (NZD), -2.7% against the Mexican Peso (MXN) and -3.1% against the Russian Rouble (RUB).
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trading between 1.2755 and 1.2871.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: ‘Brexit’ Fears likely to Dominate Currency Movement
The UK CBI orders data due for release later today is highly unlikely to have any impact upon EUR/GBP, while the Eurozone’s next notable event is a speech by the ECB’s Sabine Lautenschläger, who is speaking in Stuttgart at the end of the European session. Particularly dovish comments from her could weaken the Euro further, but renewed fears over the ‘Brexit’ referendum are likely to dictate the course of exchange rates today.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trading between 0.7766 and 0.7835.