Pound to Euro Exchange Rate Recovers Today After Falling on UK Inflation Forecasts

October 14, 2014 - Written by John Cameron

STORY LINK Pound to Euro Exchange Rate Recovers Today After Falling on UK Inflation Forecasts

The UK Pound to Euro rate fell below resistance of 1.26 EUR on Tuesday after the UK published its Consumer Price Index.

The Pound Euro exchange rate (GBP/EUR) pairing began the European session trending lower as investors bet the UK’s inflation report would show that the pace of consumer price gains slowed to a five-year low of 1.4% last month.

However, the deceleration was even steeper than anticipated, with CPI dropping to 1.2% year-on-year.

Exchange Rates Today:

The Pound to Euro exchange rate is -0.5 pct lower with a conversion rate of 1 GBP equals 1.25637 EUR.
The US Dollar to Euro conversion rate is +0.5 pct higher at 0.79000 USD/EUR.
The Australian Dollar to Euro exchange rate converts +0.02 per cent higher at 1 AUD is 0.68822 EUR.

Don't forget if you are waiting to find the best exchange rate for a currency transfer, then you're best bet is to set up your future rate order with a foreign exchange broker!



On the month, consumer prices stagnated rather than climbing the 0.2% anticipated.

The Core CPI came in at 1.5%, also below the 1.8% forecast. Given that the Bank of England’s inflation target is 2%, and it recently linked the pace of inflation to interest rate increases, this result saw the Pound plummet across the board.

As well as falling by over 0.5% against the Euro, Sterling (GBP) shed 0.8% against the US Dollar (USD) and almost 0.6% against the Australian Dollar.

The weakness in the GBP/EUR pairing persisted even as the Eurozone released its own less-than-spectacular reports.

While economists had been expecting the ZEW sentiment gauges to show declines in confidence, the indexes all fell by considerably more than projected.

The German Economic Sentiment index dropped from 6.9 to -3.6 while the measure of the Current Situation fell from 25.4 to 3.2.

A separate report showed that the rate of industrial production in the Eurozone slid by -1.8% instead of the -1.6% anticipated.

The Pound Euro exchange rate brushed a low of 1.2564 as investors digested the run of disappointing European reports.

Pound to Euro Exchange Rate Short-Term Forecast

On Wednesday the GBP to Euro could experience a fresh bout of volatility following the release of the UK’s employment reports and Germany’s final Consumer Price Index for September.

The UK’s unemployment rate is expected to have fallen to a fresh low of 6.1% in the three months to August, with the nation adding 30,000 positions.

However, the Average Earnings number will be the figure of most interest to investors.

If average wages continue to run far below the level of inflation, undermining the need for an interest rate hike from the BoE, the Pound could extend losses against rivals like the Euro and US Dollar.

That being said, European Central Bank President Mario Draghi is also scheduled to deliver a speech in Frankfurt tomorrow.

If Draghi is dovish in his outlook for the currency bloc or intimates that the ECB is coming closer to rolling out quantitative easing, the Euro could soften.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts