The Pound has had a punishing last 48 hours, with the exchange rate falling to 1.117 at the low. However, today the GBP/EUR rate moved up to 1.136 at it’s high – this is good news for anyone looking to buy Euros with Pounds.
Tomorrow could be a quiet day for Sterling as there are no data releases, however there will be Trade Balance figures for the Eurozone.
Whilst these aren’t expected to come out too far from the consensus, anything out the ordinary could rattle the already over sensitive markets.
Italian Bank Raise Concerns
Whilst there is a huge amount of pressure on Sterling, the negativity of the past few days has suggested that opinion and fact don’t always tally up.
In my opinion the economic conditions in the UK don’t warrant the GBP/EUR rate being in the 1.11’s, which is why we have seen the jump today.
Yesterday the Bank of Italy raised concerns for the Eurozone. Comments from it’s current governor, Ignazio Visco indicated that any future interest rate could be a long way off.
Previously, members of the European Central Bank had hinted that there might be potential for reducing the current economic stimulus, but this now seems unlikely.
Bank of England dash hopes for UK interest rate rise
There doesn’t appear to be any over-optimism with regards to Sterling. This week members of the Bank of England (BoE) appeared to pour cold water on the idea of an interest rate hike. This left Sterling in a dubious position.
We could see the GBP/EUR exchange rate return to the 1.15 levels if any positive comments filter out from the BoE. Especially if it was Governor Mark Carney.
This is mere speculation and in the current climate any spike for Sterling should be considered positive. After all there are still many major banks who believe the GBP/EUR rate is only a few pieces of bad news away from parity.