Exchange Rates: Pound to Euro (EUR) Advances Once More, Pound Dollar (USD) Best Level in 2014

June 17, 2014 - Written by John Cameron

STORY LINK Exchange Rates: Pound to Euro (EUR) Advances Once More, Pound Dollar (USD) Best Level in 2014

The Pound to Euro (EUR) exchange rate remained weaker after Wednesday's Bank of England minutes continue to weigh on demand for the Sterling. The minutes disappointed investors who had been expecting a more hawkish stance from the central bank’s policy makers. Today sees the release of UK retail sales data which some forecasters believe could offer some support.

As of 11:00 GMT on Thursday, we find the Pound Euro exchange rate is 0.2pct lower on the dayat 1.24827 GBP/EUR, the Pound Dollar exchange rate is 0.15 per cent higher at 1.70228 GBP/USD, the Euro Dollar exchange rate is trading 0.35 per cent up at 1.36371 and the Euro Pound rate is 0.2 pct higher at 0.80111.

The GBP to EUR rate topped out at 1.2564 during Monday’s session – this represented the pair’s highest level since the start of October 2012. However, the premier intra-European currency pair was unable to cling on to these gains during today’s session following the publication of last month’s UK Consumer Price Index inflation figures, which came out well below the mark.

The consensus expectation amongst analysts was for a slight drop from April’s year-on-year 1.8% down to 1.7%, so Sterling shipped support when the actual figure printed at 1.5%.

The implication of this tame domestic price rise figure is that the Bank of England may now opt to maintain its key lending rate at its current record low of 0.5% into next year for fear that the British economy might slip into a deflationary cycle if rates were to increase.

The Pound Dollar hits best exchange rate since August 2009

Elsewhere, the Pound Dollar exchange rate peaked at 1.7011 GBP USD yesterday – it was the first time that Cable has traded above 1.7000 since August 2009.

A near-term break above 1.7042 would represent the pair’s highest level for over 5 ½ years. However, this afternoon’s US CPI inflation data would appear to make such a move less likely. The headline inflation number for May showed at a month-on-month 0.4% - marginally up from April’s 0.3% and ahead of economists’ predictions.

The upshot is likely to have the opposite effect to the UK’s disappointing price rise data of this morning, making a US Federal Reserve interest rate rise more likely and supporting the Buck in the near-term.

Looking ahead, tonight’s New Zealand Q1 Current Account data has the potential to be market-moving. Analysts forecast that a print of above NZD1.4bn for the import/export figure will prove positive for the Kiwi Dollar. In such a circumstance, look for the Pound New Zealand Dollar exchange rate to trade Southwards towards the 1.9000 GBP/NZD level before the weekend market shutdown.

Latest Reference British Pound, Dollar & Euro Exchange Rates - 19/06/2014

The Pound Sterling to Euro exchange rate is trading down -0.2% at 1.24827 GBP/EUR.
The Pound Sterling to US Dollar exchange rate is trading up +0.15% at 1.70228 GBP/USD.
The Euro to Pound Sterling exchange rate is trading up +0.2% at 0.80111 EUR/GBP.
The Euro to US Dollar exchange rate is trading up +0.35% at 1.36371 EUR/USD.

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