Breaking News: Pound Recovers Losses before Meeting Minutes
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.4% before the Bank of England (BoE) published the minutes from its last policy gathering.
A divided vote on interest rates could push the GBP/EUR pairing back to recent 8-year highs but a unanimous decision may see Sterling slide again.
Newsflash: GBP/EUR Exchange Rate Drops to 1.42 Today
Improved Euro sentiment saw the Pound Sterling to Euro (GBP/EUR) exchange rate drop to a low of 1.4237 on Tuesday, down almost 1% on the day’s opening levels.
The pairing had previously been trending in the region of 1.4391.
However, the Pound could recoup losses tomorrow if the Bank of England (BoE) meeting minutes are hawkish in tone.
The Pound Sterling to Euro (GBP/EUR) exchange rate moved even further away from its recent over seven-year high of 1.44 on Tuesday in response to mixed UK public spending data, but the pairing could touch fresh highs after tomorrow’s BoE meeting minutes are released.
BoE 2015 Interest Rate Hike Expectations Drive Pound Sterling to Euro Exchange Rate to 1.44, but the Pairing Fails to Hold Gains
Last week the Pound Sterling to Euro (GBP/EUR) exchange rate surged as the British currency jumped across the board in response to bullish interest rate high rhetoric from key Bank of England (BoE) officials.
BoE Governor Mark Carney and formally dovish policymaker David Miles both implied that interest rates are likely to increase sooner than investors might expect and that the central bank won’t be waiting for the Federal Reserve to make the first move.
Miles asserted; ‘Given that, and given that many of the after-effects of the mess of 2008 do seem to have faded, I think a first move up in Bank Rate soon is likely to be right. I do not attach great weight to the idea that starting this process will create great risks of dropping back into very weak growth, falling into negative inflation and engendering a splurge in risk-avoiding behaviour.’
The combination of comments from Carney and Miles sent the Pound soaring, with the GBP/EUR exchange rate advancing to its most impressive exchange rate since before the global economic crash.
However, with the situation in Greece improving, the Pound Sterling to Euro (GBP/EUR) exchange rate moved away from the 1.44 level this week.
Euro Exchange Rate Forecast: EUR/GBP, EUR/USD Fluctuate as Greek Banks Reopen and Nation Makes IMF Repayment
The Euro managed to eke out a modest gain against the Pound on Tuesday as investors engaged in profit taking after the GBP/EUR exchange rate achieved a more than seven-year high of 1.44.
The common currency also edged slightly higher against the US Dollar as investor fears regarding the Greek situation began to calm.
Although Greece still has a long way to go in its attempt to return to some semblance of normality after months of unrest, the nation’s banks have reopened following a three-week closure and a repayment to the International Monetary Fund (IMF) was made on time – both developments which reduce the odds of a Grexit.
The head of the Greek banking association commented; ‘Capital controls and restrictions on withdrawals will remain in place, but we are entering a new stage which we all hope will be one of normality.’
The Euro has yet to enjoy a sustained rally off the back of the slightly improved Greek picture, but further positive developments could give the common currency a lift as the week progresses.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: UK Public Borrowing Falls by Less-than-Expected
The Pound Sterling to Euro (GBP/EUR) exchange rate fell to a low of 1.4337 on Tuesday as data showed that British headline public borrowing declined by less-than-forecast in June.
A drop from 10.2 billion Pounds to 8.5 billion Pounds had been expected, but a deficit of 9.4 billion Pounds was actually recorded in June.
However, this still marked the lowest June budget deficit for seven years.
Demand for the Pound was also affected as Chancellor of the Exchequer George Osborne announced that he is aiming to accumulate a further 20 billion Pounds of savings from UK government departments.
Osborne was quoted as saying; ‘We are still borrowing 1 Pound for every 10 Pounds we spend and national debt remains at its highest level for 50 years. If we do not deal with this debt, we run risks with our economic security.’
Pound Sterling to Euro Exchange Rate Forecast: GBP/EUR Predicted to Return to 1.44 if BoE Meeting Minutes Show Split Vote on Interest Rates
While the GBP/EUR currency pair is currently trending in a slightly softer position, the Pound could romp back above the 1.44 level tomorrow in response to minutes from the Bank of England’s (BoE) last policy meeting.
Given recent remarks from BoE officials, it is possible that the vote on whether or not to adjust interest rates was split. If that proves to be the case, and one or more members of the Monetary Policy Committee (MPC) voted for immediately higher borrowing costs, the Pound could post broad-based gains over the course of the European session.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4310, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.6969, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5568 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6425