GBP/EUR Plummets as Carney Throws Cold Water on Further BoE Rate Hikes: Pound Sterling Euro Exchange Rate Live

GBP/EUR Exchange Rate Tumbles as Carney Elaborates on Rate Decision

UPDATE: The Pound Sterling to Euro (GBP/EUR) exchange rate briefly soared this afternoon in as the Bank of England’s voted unanimously to raise interest rates to 0.75%.

However the Pound was quickly brought crashing back down to earth, with the GBP/EUR exchange rate falling as much as 0.4% as BoE Governor, Mark Carney took the stage for his following up speech.

During the press conference Carney spoke of the need for monetary policy to ‘walk not run to stand still’, signalling the next hike is probably some way off, and driving Sterling lower.

GBP/EUR Exchange Rate Stable as Markets Await BoE Rate Hike

The Pound Sterling to Euro (GBP/EUR) exchange rate is trading narrowly this morning as markets brace for the Bank of England’s (BoE) latest rate decision, due at lunchtime.

At the time of writing the GBP/EUR exchange rate is virtually unchanged from its opening levels today, after appreciating by around 0.2% on Wednesday.

Pound Sterling (GBP) Exchange Rates Static in Run up to BoE ‘Super Thursday’

In the wider currency market the Pound (GBP) is more or less range bound this morning, and showing little to no movement against the Euro (EUR) and many of its other peers as traders await the conclusion of the BoE’s August policy meeting.

Economists widely predict that the meeting will see the bank’s Monetary Policy Committee (MPC) vote to raise interest rates from 0.5% to 0.75% this month,

This will be the first time that the BoE has raised interest rates above 0.5% since the financial crisis.

However with GBP investors anticipating the BoE will signal this hike will be a one-off and not the start of a new tightening cycle, any upside potential for the Pound today looks limited.

Laith Khalaf, senior analyst at Hargreaves Lansdown, suggests:

‘Thursday could be a hugely symbolic day if the Bank of England decides to raise interest rates above 0.5% for the first time since the financial crisis.

‘However it doesn’t actually change too much on the ground. Markets are already expecting a rise, and from here on in, further hikes are going to be few and far between because UK economic growth is so fragile.’

Also tempering Sterling sentiment this morning are fears that the growing Brexit uncertainty and some weak economic data could see Mark Carney don his ‘unreliable boyfriend’ moniker once again, with the Pound exchange rate likely to nosedive should the BoE Governor shy away from a hike at the last minute again.

Euro (EUR) Exchange Rates Flounder amidst a Lull in Data

In the absence of any notable Eurozone data releases, movement in the Euro (EUR) exchange rate today is likely to be limited, with any momentum driven by shifts in currency markets.

With the focus undoubtedly on the BoE’s rate decision today, this is likely to see the GBP/EUR exchange rate remain largely static until the afternoon.

Meanwhile, against its other peers such as the US Dollar (USD), the Euro is edging lower this morning as renewed trade tensions between the US and China prompt investors to flock to safe-haven currencies.

GBP/EUR Exchange Rate Forecast: Slowing Service Sector Growth to Dampen Sterling?

Looking past the BoE’s rate decision to Friday’s session, the Pound Euro (GBP/EUR) exchange rate could be placed on the back foot following the publication of the UK’s latest Services PMI.

With the service sector accounting for over 80% of the UK economy, forecasts that the UK’s services PMI will have fallen from 55.1 to 54.7 are unlikely to reflect well on Sterling (GBP).

Meanwhile the Euro (EUR) exchange rate may tick higher tomorrow, following an expected rebound in the Eurozone’s latest retail sales figures.

Luke Trevail

Luke studied Journalism at university but quickly moved into the financial sector, initially working in retail banking before joining TorFX in 2007. As a Senior Account Manager Luke assists in overseeing the management of the company’s exposure to currency volatility. He uses his years of foreign exchange experience to produce regular news updates exploring the latest currency movements.

Contact Luke Trevail