GBP to EUR Conversion Rate Close to 1.4000 Yesterday
The Pound Sterling (currency : GBP) put in a strong performance against the euro (currency : EUR) during the early part of yesterday’s trading session before fading after the New York opening bell.
The Sterling euro exchange rate briefly looked like breaking back above the 1.4000 GBP EUR threshold during the middle part of the European equities session.
The pair topped out at 1.3968 GBP EUR before peeling back as investors priced in the changes in Bank of England (BoE) and European Central Bank (ECB) interest rate expectations which the past fortnight has seen.
BoE Chief Carney Predicts that Base Rate will Remain Low ‘For a Long Time to Come’
Analysts had been expecting UK interest rates to be heading Northwards during Q1 of 2016 following comments from BoE Chief Mark Carney in the middle part of the year suggesting that policy tightening would begin ‘at the turn of the year’.
Carney changed his tune last month when he told the UK parliament treasury select committee that Base Rate would remain low ‘for a long time’ to come.
Euro Cools from Fresh Highs after ECB Decision Provoked EUR Surge Last Week
Meanwhile, investors had been predicting that last week would yield a tangible loosening of policy from the ECB following President Mario Draghi’s autumn warning that his policy board would be ‘reviewing’ its Quantitative Easing programme in December.
In the end, last week’s announcement of no increase to the €60bn per month which the ECB allocates to its controversial QE scheme came as a relief to euro-holders.
The extension of the asset purchase programme by a mere six months was seen by FX insiders as a signal that Draghi’s wish to throw the proverbial ‘kitchen sink’ at policy loosening had been rebuffed by policymakers led by the German faction advocating ‘sound money’.
For the first time, Draghi’s previous promise to do ‘whatever it takes’ to kick start the euroland economy appeared hollow and the shared currency picked up support in the markets as a result.
Looking ahead, this morning’s UK Industrial Production and Manufacturing Production data for October is forecast to be market-moving, while Q3 whole of eurozone Gross Domestic Product data, due out at 1000hrs GMT, is also likely to affect levels on GBP EUR.