The Pound has continued to grow against the Euro today as the Bank of England refrain from further stimulus. The central bank maintained interest rates at 0.50% and kept the asset purchase fund’s target at £325 billion. Industrial Production increased by 0.4% in February which also boosted the Sterling to Euro Exchange Rate, however the UK’s recent resurgence suffered a slight setback as Manufacturing Production fell -1.0% in February, the most in over a year.
The Pound to Euro Exchange Rate is currently 1.2121 (14:51). But the pair reached a daily high of 1.214 earlier on today. The BoE’s decision to hold off on monetary policy could potentially pave the way for further Sterling gains as things appear to be picking up in the British economy. This week has almost exclusively seen UK ecostats show a virility which has impressed investors. The consensus now suggests that the UK returned to growth in the first three months of 2012, thus avoiding a technical recession and the depressing media speculation that comes with it. The National Institute of Economic and Social Research (NIESR) released their GDP estimates for Q1 2012 in the UK at a positive 0.1%.
The Pound’s recent strength is being mirrored by the Euro’s weakness. Germany – the leading light in a currency zone of doom and gloom – released a poor set of Industrial Production figures today which detail a drop of -1.3% over the past year. The single currency’s poor performance of late has seen Euro selling from all angles. This morning the Euro to Swiss Franc Exchange Rate briefly fell below the 1.20 level that the Swiss National Bank has vowed to maintain. For the first time since last September when the SNB took affirmative action to protect the country’s competitiveness, EUR/CHF dropped to 1.997. SNB officials have spoken out since, reaffirming their dedication to the 1.20 floor, but the mere fact that some investors were willing to go up against the central bank in order to transfer their funds out of Euro denominated assets can only be bad news for the single currency.
As markets gear up for the long weekend the Pound is likely to maintain a strong exchange rate over 1.20 against the Euro.