The Pound continues to edge higher against the Euro following this morning’s Consumer Price and Retail Price index. The releases, which measure price changes for specific goods came in .1% better across the board, and signals a moderate rise in inflation following the Brexit vote in June.
Weaker than expected Euro employment change added further to the GBP/EUR position, with the pair now trading .7 cents higher compared to the beginning of today’s trading session.
However, further movements for GBP/EUR are expected today, the potential for a US interest rate hike tomorrow is testing the Euro’s position coupled with concerns for the Eurozone in the wake of the Italian Referendum result, while in the background Greece’s concerns have once again surfaced adding further headaches to the ECB’s list of monetary woes.
The uncertainty that lies ahead for both the UK and Eurozone makes the US Dollar one of the most attractive currencies to investors, with analysts predicting an almost certain rate hike tomorrow, its appetite has helped bolster the US Dollar whilst weakening the position of the Euro.
If the FED move interest rates tomorrow, the Pound to Euro position may benefit from a stronger US Dollar. in spite of the UK’s many complications around the Brexit vote, the economy appears to be staying afloat for now, and arguably, is currently in a better position than its major counterpart.
Is the Government opting for a transitional Brexit?
Talks of an interim agreement between the UK and EU has also helped ease market concerns, and echo the Chancellor Philip Hammond’s comments to help ease uncertainty for banks and the UK’s huge financial sector. It remains unclear as to whether the UK will be able to negotiate a deal with the EU within the 2 year time frame, by which a transitional Brexit deal could prevent a ‘cliff edge’, as such the Pound continues its foothold against the struggling Euro.
Investors want certainty and a transitional Brexit deal could strengthen the Pound’s position further as we approach the invocation of Article 50 in March.
In light of recent events, Pound Sterling may continue its upward trend against the Euro as we approach 2017, and looks set to pass the 1.20 barrier by the end of the trading week.
Current exchange rates
The below table provides GBP/EUR, GBP/USD, GBP/AUD and GBP/CAD exchange rates which are accurate at the time of writing.
|Currency Pair||Current Interbank Exchange Rates|
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