Euro (EUR) Soft as Markets Assess QE One Year on
The European Central Bank (ECB) has been implementing quantitative easing (QE) for an entire year. As fears continue to build that the world’s central banks are reaching the limits of their power to battle economic weakness, the Euro has been softened by a renewed scrutiny of Mario Draghi’s QE programme. With the next ECB policy meeting happening tomorrow, which many believe will see an expansion of the asset purchasing programme, the successes or failures of the current policy are hotly debated.
Eurozone GDP Shows Better-than-Expected Monthly Growth
The Euro has been strengthened today by above-forecast growth figures for the last three months of 2015. The Eurozone economy grew 0.3% as predicted compared to the previous month, while year-on-year (YoY) growth was 1.6%, 0.1% higher-than-anticipated.
Today has been another busy day for ‘Brexit’ news, led by controversy surrounding London Mayor Boris Johnson. The latest developments have weakened Pound Sterling (GBP). The Euro (EUR), meanwhile, is strong ahead of today’s Eurozone growth data for the end of 2015, while the US Dollar (USD) is also firm after upbeat remarks from an influential Federal Reserve official.
‘Gagging’ Claims Rife on Both Sides of EU Referendum Debate; GBP/EUR Weakens on Uncertainty
Both sides of the ‘Brexit’ campaign are the target of personal and media attacks, after allegations surfaced that Boris Johnson had gagged staff from speaking out in support of Britain’s EU membership. The news comes just a day after Boris Johnson appeared on the Andrew Marr Show to criticise the rumoured sacking of British Chambers of Commerce Director General John Longworth. Longworth had previously broken the Chambers’ commitment to remain impartial when he voiced his support for a ‘Brexit’. The media is rife with rumours that the government forced Longworth to resign, despite claims by Longworth himself that it was his own decision to step down from his role. Having so strongly criticised the situation, the revelation that Boris Johnson may have placed similar restrictions upon his own staff has seen many MPs and peers taking to Twitter to accuse him of hypocrisy. The Pound Sterling to Euro exchange rate has suffered thanks to the swirling uncertainty, weakened further by the imminent release of Eurozone GDP, anticipation of which has boosted the common currency. Preliminary figures for the final quarter of 2015 are expected to show that Eurozone GDP grew 0.3%, while year-on-year (YoY) the economy is predicted to have expanded by 1.5%. Mark Carney and Jon Cunliffe, both members of the Bank of England (BoE), are due to testify on the impact of a ‘Brexit’ upon the UK, which is likely to further weaken GBP/EUR today.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Advances on Fed Official’s Confident Inflation Outlook
Speeches from two Federal Reserve Officials yesterday have strengthened the ‘Greenback’ after predicting an increase in inflationary pressures in the US. Although Fed Governor Lael Brainard also urged a cautious approach to normalising monetary policy, the fact that she had a strong outlook on inflation, combined with similar sentiment from Fed Vice Chair Stanley Fischer, has boosted confidence in the US economy and in the likelihood that the Federal Reserve will act to raise interest rates during the course of 2016. It’s a quiet day for US data, although the NFIB Small Business Optimism survey for February could cause some movement.
Current GBP, EUR, USD Conversion Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2921, while the Euro to Pound Sterling (EUR/GBP) exchange rate is trading around 0.7736. The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.4234, while the US Dollar to Pound Sterling (USD/GBP) exchange rate is trading in the region of 0.7020.