Foreign Exchange Insight : Pound Euro GBP EUR Rate Edges Higher on UK Inflation Data and Weak Eurozone GDP Growth Number

Modified: Wednesday, 16 November 2011 06:27 BST - Written by Tim Boyer

STORY LINK Foreign Exchange Insight : Pound Euro GBP EUR Rate Edges Higher on UK Inflation Data and Weak Eurozone GDP Growth Number

The Pound Euro exchange rate (GBP EUR) is 1.1724. The Pound Dollar exchange rate (GBP USD) is 1.5764. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5654.

Yesterday morning’s UK CPI inflation figure for October printed at 5.0%, slightly below analysts’ expectations of 5.1% and down on September’s counterpart figure of 5.2%. However, the number remains significantly higher than the British Government’s target of 2.0%, meaning that Bank of England Governor Mervyn King will once again be required to write a letter of explanation to George Osborne, the UK Chancellor of the Exchequer. King’s best fountain pen has been getting through some amount of ink in recent months….

Many economists now feel that British price rises have peaked, for the time-being at least. This affords UK policy-makers increased scope to further ease monetary policy. This could see a further increase to the current £275bn allocated to Britain’s asset purchase scheme some time early in 2012.

Elsewhere, yesterday morning also saw the release of Eurozone GDP growth figures for quarter 3, which showed that economic activity in the region had increased by a slender 0.2% in the three months to the end of September. This is a worrying figure for investors holding Euro-denominated assets, as it leaves Europe’s economy delicately balanced just the right side of a new recession, particularly given the severe austerity measures which are being introduced in Greece, Italy and other states.

Predictably, the Euro came under pronounced selling pressure during yesterday’s morning session in Europe. This saw the GBP EUR rate climb to an intraday high of 1.1739, close to last week’s 8-month high of 1.1785, before easing back later in the day.

Worries over a global double-dip recession saw the US Dollar and Japanese Yen well supported during yesterday’s session as institutional investors sought out a safe haven from potentially stormy economic waters ahead. This saw the GBP USD rate break down through the 1.58 level overnight, for the first time since October 21st.


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