Foreign Exchange Forecasts: Pound Euro Rate To Dip, Pound Rupee Rate Breaks Higher

November 13, 2013 - Written by David Woodsmith

STORY LINK Foreign Exchange Forecasts: Pound Euro Rate To Dip, Pound Rupee Rate Breaks Higher

The Pound euro exchange rate could incur further losses if today’s Bank of England Quarterly Inflation Report is downbeat. Meanwhile, GBP INR has registered healthy gains.

The Pound to Euro exchange rate (GBP/EUR) is currently trading down by 0.72% at 1.1841 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8445 EUR/GBP.

Yesterday’s UK cost of living numbers revealed that the rate of price rises in the British economy has slipped below the Bank of England’s own forecast which it made public at its last Quarterly Inflation Report in August. The below the curve inflation figures are likely to temper the rhetoric contained in this quarter’s Bank of England inflation report, due for publication this morning.

The latest Bank of England policy announcement last week set this morning’s Bank of England missive up nicely, confirming that it will contain a ‘forward guidance’ statement which will convey to market participants the likely future direction of UK monetary policy. BoE Governor Mark Carney has become well known for such statements since he took over the helm at the Old Lady of Threadneedle Street during the early part of Summer.

Given that domestic inflationary pressures seem to be easing, it would appear highly likely that today’s forward guidance commentary will suggest that a tightening of UK monetary policy will be further into the future than analysts had previously bargained for. Previous statements from the Bank have suggested that some 750,000 jobs would need to be generated in the British economy before an interest rate rise could be countenanced. There appears a distinct possibility that today’s report will also make mention of the need to re-inflate prices in the UK economy – any such comments will be likely to send the Pound into freefall against the other major global currencies, with the Pound euro exchange rate (GBP/EUR) likely to slump towards the 1.1500 threshold.

Elsewhere, the Pound Indian Rupee exchange rate (GBP/INR) accumulated to above the 101.00 level during trading yesterday as investors moved out of the Indian tender thanks to fears that a reintroduction of state-run oil refineries is causing rupees to be shipped out of India en masse.

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TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Indian R Forecasts