Growing Push for BoE Interest Rate Hike Triggers Pound to Euro (GBP/EUR) Exchange Rate Rise
UPDATE 14:34 BST: The Pound (GBP) has made a remarkable turnaround against the Euro (EUR) today, with the GBP/EUR exchange rate rising by 0.5%.
Pound Sterling has surged higher in the pairing, trading at a near-weekly high on the interbank rate at €1.14.
The earlier Bank of England (BoE) interest rate decision didn’t bring any rate change, but the numbers behind the result still triggered a GBP rally.
In addition to Ian McCafferty and Martin Sauders, policymaker Andy Haldane has now also voted for higher interest rates.
This leaves the rate-setting committee split at 3-6 and has raised hopes for a genuine interest rate hike in 2018, potentially as soon as August.
Forecast-Beating Reduction in UK Government Borrowing Fails to Shift GBP/EUR Exchange Rate
UPDATE 11:27 BST: The Pound (GBP) has continued to trade in a narrow range against the Euro (EUR) today, with the interbank rate resting at €1.13.
This lack of movement comes despite supportive UK government borrowing data, which has shown an unexpected drop in the deficit during May.
Despite hopes that the Treasury will have more ‘wriggle room’ to spend on services like the NHS, the GBP/EUR exchange rate hasn’t moved as traders are still awaiting the Bank of England decision at noon.
The more high-impact BoE interest rate decision is still on the way and could lead to Pound Sterling volatility, depending on what is revealed.
Tense Pre-BoE Trading Leaves GBP/EUR Exchange Rate Steady
The Pound (GBP) has held around opening levels against the Euro (EUR) today, ahead of a major meeting of Bank of England (BoE) policymakers.
The lack of definitive movement in the GBP/EUR exchange rate is down to trader tension, as the BoE meeting could either boost the Pound or cause significant losses against the Euro.
Outside of this upcoming event, today has brought news that UK public sector borrowing in May has fallen to the lowest level for that month since 2007.
This reduction in borrowing is down to higher tax revenues and roundly beat forecasts for a smaller reduction in borrowing levels.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Steady on Resilient French Business Confidence
The Euro (EUR) has traded in a narrow range against the Pound (GBP) today, with the day’s latest Eurozone data being broadly supportive.
France’s business confidence reading for June printed at 110 points; May’s reading was revised up from 109 points, also to 110.
Economists had been forecasting a decline to 108 points, so June’s higher readings have been positive in that regard.
The highest level of French business confidence this year was January’s 114 point reading, which might explain why there hasn’t been greater Euro support from this news.
Pound to Euro (GBP/EUR) Exchange Rate Forecast: Volatility ahead on Bank of England (BoE) Meeting
There could be some significant Pound to Euro (GBP/EUR) exchange rate volatility ahead, after Bank of England (BoE) policymakers hold June’s policy meeting at noon today.
There is little expectation of there being any adjustment to interest rates, but significant Sterling movement could be caused by there being any hints of a rate hike later in 2018.
Some economists have been pricing in an August interest rate hike, so suggestions that higher rates could be coming imminently might cause a GBP/EUR exchange rate rally.
Given how often GBP traders have been let down by continued interest rate freezes, any indication whatsoever of higher rates in 2018 might be enough to cause GBP gains.
Daily Euro to Pound (EUR/GBP) Exchange Rate Prediction: Are Losses ahead on Sliding Eurozone Confidence Levels?
This afternoon’s Eurozone data might not be so supportive – a consumer confidence flash for June is tipped to show an index decline from 0.2 points to -0.1.
While not a major reduction, such a drop could still devalue the Euro and cause EUR/GBP exchange rate losses before Friday.
Confidence levels have been positive since the start of 2018, so a decline would end the current streak of optimism outweighing pessimism.