Pound To Euro Exchange Rate (GBP EUR) Climbs

Published: Friday, 31 May 2013 14:00 BST - Written by Minesh Chaudhari

STORY LINK Pound To Euro Exchange Rate (GBP EUR) Climbs

It was a case of mixed messages emanating from the UK property finance market during this morning’s session and the net effect saw the Pound Sterling register significant gains against the euro, sending the GBP EUR exchange rate (currency : GBP EUR) up to as high as 1.1715 earlier on.

On the positive side of the equation, last month’s Net Lending Secured on UK Dwellings data thrashed expectations of £0.5bn to show at £0.9bn. The figure provides a hint that Britain’s mortgage lenders, who have been collectively sitting on their hands and hoarding cash since the credit crisis broke during 2007/2008, are now beginning to regain their willingness to part with funds. The UK’s coalition government will see the figure as a vindication for a raft of policies, including the controversial Funds For Lending scheme, which have aimed to get funds flowing to British property purchasers.

Looking at this morning’s data from a ‘glass half empty’ perspective, April UK Mortgage Approval figure failed to print at the anticipated 54,600 level, showing at a mildly disappointing 53,700. However, if the average amount borrowed by each UK resident securing funds against a property is increasing, then Britain’s policymakers are unlikely to complain if the number of new loans is slightly lower than had been hoped for. The overall level of lending figure is what their policies will be judged on moving forward.

Another factor affecting the GBP EUR exchange rate this morning has been the latest whole of eurozone core Consumer Price Index data, released earlier, which showed at an annualised 1.2% versus expectations of a 1.1% print. Even though the closely-watched inflation data only marginally beat analysts’ expectations, the fact that the rate of price rises in mainland Europe appears to be rising once more may limit the European Central Bank’s monetary policy decision-making in the near-term. The number is likely to dampen the recent talk of the potential for negative interest rates in Europe for the time being, meaning that the ground which the single currency has given up so far today against Sterling may be quickly recouped.

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