Pound Sterling to Euro (GBP/EUR) Conversion Rate Holding Weak Position after ECB Rate Decision
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Wednesday afternoon.
Despite a complete absence of domestic data today the Pound Sterling held daily gains versus most of its peers. The appreciation can be linked to speculation that the minutes from tomorrow’s Bank of England (BoE) interest rate decision will prove more hawkish than Novembers. Some traders are going as far as to speculate that two of the nine policymakers will vote for an immediate hike, improving on recent months which has seen just one dissenter. Most economists agree, however, that the BoE will not make any alterations to monetary policy at this time.
The current weak GBP/EUR trade weight may actually prove to be UK supportive in the long-term as the high value of the Euro may prompt BoE policymakers into hiking the benchmark interest rate ahead of schedule. That is ultimately still likely to be a long way off, however, given the absence of price pressures and external risk factors. ‘The BoE’s caution over the Pound’s strength maybe exaggerated with wage inflation set to pave the way for a more sterling-friendly monetary policy committee,’ said Viraj Patel, currency strategist at ING.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3796.
Euro to Pound Sterling (EUR/GBP) Conversion Rate to Trend Narrowly Today
Given the absence of further domestic data to provoke changes, the shared currency is likely to continue to hold a position of strength versus its peers. A spate of profit taking caused the Euro to cool from the fresh highs reached in the wake of the European Central Bank (ECB) rate decision, in which policymakers left asset purchases unchanged and cut the deposit facility rate by less-than-projected, but wasn’t enough to weaken the single currency to levels seen prior to last week’s ECB decision.
Today’s European data produced mostly disappointing results with German Imports and Exports contracting well beyond expectations in October. ‘German exports have become an extremely mixed bag, always up for surprises and full of diverging trends. Due to too many economic slowdowns and geopolitical conflicts around the world, exports will continue having troubles gaining more momentum in the period ahead. However, as long as the monetary policy divergence on both sides of the Atlantic continues and the ECB continues with QE, exports should remain supportive to growth,’ stated Carsten Brzeski, ING economist.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3736 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: BoE Interest Rate Decision in Focus
There will be several ecostats on Thursday with the potential to provoke GBP/EUR exchange rate movement. The BoE interest rate decision, or more specifically the corresponding minutes, will likely dominate trader focus. However, British trade balance data may also provoke Sterling movement. Influential European data is lacking so single currency movement will most likely be dictated by market volatility and speeches from ECB officials.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3807 during Wednesday’s European session.