Euro to Pound Sterling (EUR/GBP) Exchange Rate Slides to 0.7385
The Euro reversed earlier gains against the Pound as European trading progressed.
The EUR/GBP pairing lost 0.35% as the Bank of England’s (BoE) quarterly inflation report showed that it expects inflation to rebound towards the close of this year.
The central bank was also fairly optimistic on the subject of UK growth and Governor Mark Carney commented; ‘Domestic pressures are starting to pick up and are likely to build further over the forecast period as a steady expansion in demand absorbs the remaining economic slack. The MPC judges it more likely than not that bank rate will increase over the forecast period.’
Meanwhile, the Euro was pressured lower by a disappointing industrial production report.
Production was shown to have stagnated on the month in December rather than increasing by 0.2% as expected.
This resulted in an annual decline of -0.2%.
The Euro to Pound Sterling (EUR/GBP) exchange rate was left trading in the region of 0.7394
The Euro to Pound Sterling (EUR/GBP) exchange rate could fall to fresh lows later today if the BoE’s inflation report reduces the odds of a 2015 rate cut.
EUR/GBP Exchange Rate Edges Higher, Greek Talks Inconclusive
The Euro to Pound Sterling (EUR/GBP) exchange rate brushed fresh seven-year lows on Wednesday ahead of a gathering of European finance ministers.
Concerns that the meeting would result in dissatisfaction for Greece, and push the nation a step closer to leaving the Eurozone, piled pressure on the common currency.
However, despite the talks ending inconclusively and German data disappointing expectations, the Euro posted a modest gain against the Pound early in the European session.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7442
Investors had harboured slim hopes that the united European Finance Ministers would make some progress on the subject of Greece’s debt renegotiation, but hours of debate didn’t even result in an official statement being issued.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7416
After the event Greek Finance Minister Yanis Varoufakis commented; ‘We understand each other much, much better now than we did this morning. Europe manages to find agreements even if it’s at the last moment.’
With time running out (Greece’s current bailout concludes at the end of February) progress will have to be made soon.
The Euro managed to hold its 0.2% gain against the Pound even as Germany’s final Consumer Price Index for January was negatively revised.
Inflation in the Eurozone’s largest economy was shown to be down -0.4% on the year (rather than the -0.3% originally estimated) and -1.1% on the month (a -1.0% monthly decline had initially been projected).
Euro to Pound (EUR/GBP) Exchange Rate Forecast
Sterling losing ground against the common currency is largely due to speculation surrounding today’s Bank of England (BoE) inflation report.
Given that oil prices have fallen by over 50% in the last six months, the BoE is more than likely to cut its inflation forecasts.
However, if they spin the situation positively (and intimate that lower fuel costs could benefit the UK economy) it would leave the door open to an interest rate increase taking place this year and bolster the Pound in the process.
Conversely, cautious remarks regarding the inflation situation or any hints that borrowing costs should remain on hold would be Pound-negative.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7430
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3459
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1320
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8825