On a day of unexpected volatility, the Pound to Euro exchange rate (GBP/EUR) has bounced back from initial losses to trade higher.
Sterling initially fell when a cautious speech from Bank of England (BoE) Governor Mark Carney panicked currency traders.
Mr Carney stated that Brexit talks remain a point of concern for policymakers and downplayed the chances of a May interest rate hike.
These GBP/EUR losses proved shortlived, however, when the BoE’s Michael Saunders gave hawkish remarks and restored trader confidence.
Mr Saunders hinted at a steady pattern of interest rate hikes, even suggesting that several rate hikes could take place each year.
Traders subscribed more strongly to Mr Saunder’s outlook and the Pound rose along with the odds of a rate hike in May.
(Last updated 20th April, 2018)
The Pound to Euro (GBP/EUR) exchange rate has leveled out today, following the release of worse-than-expected UK retail sales data.
The month-on-month and year-on-year readings for March have showed slowing activity, which has been blamed on poor weather.
Focusing on the Pound-boosting bright spots amid the gloom, PricewaterhouseCoopers’ Consumer Markets Leader Lisa Hooker said;
‘It’s not all doom and gloom. This week, we’ve already seen evidence of wages growing in real terms as inflation has eased.
‘Moreover, our most recent survey shows that consumer sentiment is recovering and is higher than it was both in December and this time last year’.
(First published 19th April, 2018)
Forecast for Higher Annual UK Sales as Pound to Euro (GBP/EUR) Exchange Rate Dips
The Pound (GBP) has made a minor loss against the Euro (EUR) today, but could advance in the near-future when national retail sales data is released.
At present, the Pound remains in low demand because of perceptions that falling national inflation could reduce the odds of a May interest rate hike.
A number of economists have changed their outlook since inflation rates were reported to have fallen to their lowest level in a year on 18th April.
The concern now is that with less pressure on policymakers to tighten monetary policy, the Bank of England (BoE) might decide not to increase interest rates in May.
This may not be a longlasting negative influence on the Pound, but for the present time is holding GBP back in the Pound to Euro (GBP/EUR) exchange rate.
Euro to Pound Exchange Rate (EUR/GBP) Holds near Opening Levels after Inflation Stats Miss Forecast
The small Euro to Pound (EUR/GBP) exchange rate rise seen today has come after mixed Eurozone data releases on 18th April.
The final inflation rate stats for March showed growth in month-on-month and year-on-year levels of inflation, although the annual reading missed forecasts.
The rise from 1.1% to 1.3% only just missed the expected 1.4%, but nonetheless lowered confidence among Euro (EUR) traders and has prevented a Euro rally.
Euro traders have been waiting for inflation rate levels to rise to the region of 2%, which is the European Central Bank’s (ECB) target range.
With inflation rates not rising by as much as expected, this means that there could be a longer wait ahead before the ECB decides to act and adjust monetary policy.
Pound to Euro (GBP/EUR) Exchange Rate Forecast: Will Sterling Advance on UK Retail Sales Growth?
The Pound (GBP) may be able to advance against the Euro (EUR) in the near-term when retail sales data for March comes out.
Current expectations are for levels of sales activity to have fallen in March compared to February, but for sales to have risen in March 2018 compared to March 2017.
Annual readings are generally considered more important than monthly measurements, so the Pound could appreciate if these forecasts prove accurate.
In the event that monthly sales do drop off, Pound traders may dismiss such a result as a symptom of the snowstorms that hit the UK during March.
The next data likely to affect Euro exchange rates will come out on the afternoon of 20th April, covering a consumer confidence flash for April.
Estimates are for a drop in the initial confidence reading, from 0.1 points to -0.2.
A decline in the reading may cause a brief EUR devaluation, allowing a late-week Pound to Euro (GBP/EUR) exchange rate rise.