- GBP EUR Stable as BoE Meeting Approaches – BoE expected to hold interest rates at current levels.
- UK Retail Sales Data Impresses – Pound gains slightly as sales data better than expected.
- Greek Debt Dispute Weighs on Euro – ESM freezes Greek debt relief as it objects to Greece’s recent welfare spending.
- Pound Euro Forecast – Eurozone inflation may prompt decline in currency pairing as lull in impactful UK data weighs on Sterling.
The GBP EUR exchange rate remains stable following its recent gains as investors await the Bank of England’s (BoE) latest policy meeting later today.
Pound Euro (GBP EUR) Flat as BoE Policy Meeting Approaches
The Pound Euro (GBP EUR) exchange rate was trending flatly in the run up to the BoE’s latest interest rate decision.
Most analysts predict that the Bank will vote to hold interest rates at their current record low of 0.25%, while also keeping its £435bn asset purchasing programme as it seeks to maintain its ‘neutral bias’ and ability raise or lower interest rates in reaction to ‘Brexit’.
Investors will also look to see if BoE Governor Mark Carney mentions any plans to keep inflation on target as the unexpected rise to 1.2% in November has caused concerns that CPI will overshoot Carney’s target of 2.0% in 2017.
Slight Rise in Pound as Retail Sales Exceed Expectations
Pound Sterling (GBP) saw a slight rise this morning as markets were impressed by better than expected retail sales in November as they were up 6.6% over last year and surpassed expectations of 6.0%. However, the Pound was unable to make any major gains as the rate of consumer spending was still down from last month’s 7.5%
The better than expected results have largely been attributed to an increase in non-food sales thanks to ‘Black Friday’ events and the rise in online shopping, as the Office for National Statistics (ONS) announced that sales online rose by nearly 25% over the same period last year.
Euro (EUR) Pressured by Concerns for Geek Debt
The Euro continues to be pressured by the European Stability Mechanism’s (ESM) decision to suspend debt relief negotiations with Greece after the Greek Prime Minister Alexis Tsipras announced that the government would be spending €617m on benefits for low-income pensioners over Christmas. As the ESM announced;
‘Following recent proposals by the Greek government to spend additional fiscal resources for pensions and VAT, our governing bodies have put their decisions temporarily on hold.’
This is another in a series of welfare programmes implemented by the Greek government recently, angering the nation’s creditors as it is supposed to implementing further austerity measures in order to comply with the terms of its bailout and causing investors to fear for the future of the Eurozone should the Greek economy be allowed to fail.
GBP EUR Exchange Rate Forecast: Eurozone CPI Data May Boost Euro
The GBP EUR exchange rate may slide tomorrow if the latest Eurozone Consumer Price Index shows any improvement. Economists expect Eurozone inflation to rise from 0.5% to 0.6% in November which is likely to cause the Euro to rally.
Meanwhile the Pound may struggle to advance on Friday as the UK economy will only release a couple of low impact ecostats, hindering Sterling’s chances to counter any potential movement in the single currency.
Current Interbank Exchange Rates
At the time of writing the GBP/EUR exchange rate was trending around 1.19 and the EUR/GBP exchange rate was trending around 0.83.