Pound Sterling to Euro Exchange Rate Forecast: GBP EUR Improves on Putin Comments

December 18, 2014 - Written by John Cameron

STORY LINK Pound Sterling to Euro Exchange Rate Forecast: GBP EUR Improves on Putin Comments

Shop Sales Data Buoys Pound Sterling Rate Today

The Pound Sterling (currency:GBP) was buoyed by the news earlier today that domestic Retail Sales had jumped by a year-on-year 6.4% last month.

The pronounced increase was attributed to heavy spending by British shoppers on and around the final Friday of the month which has been dubbed ‘Black Friday’ after its better-known American cousin. Heavy discounting by UK shops around this time served to drastically increase footfall as consumers took advantage of the lowered prices.

Pound to Euro Exchange Rate Jumps

The positive UK shop sales numbers have seen the Pound Sterling euro exchange rate spiked to as high as 1.2707 GBP EUR earlier on; the pair had been changing hands in the 1.2400s as recently as the start of this week. Meanwhile, troublesome comments from Russian Premier Vladimir Putin during his end of year press conference have triggered renewed selling pressure on the euro (currency:EUR). Putin rhetorically asked the gathered members of the fourth estate if the European Union wanted, ‘a stable guaranteed supply of energy resources from Russia that they desperately need?’ He went on to affirm Russia’s near-monopoly status for gas supplies to the euroland, stating that, ‘if they don't want it, well, then it's not going to happen. There are no other energy sources other than from Russia.’ The delicate situation continues to provide a real threat to the single currency and analysts forecast that a run against the euro could be possible if Russia persists with its hardline stance.

Swiss Franc Weakens on SNB Action

Elsewhere, the Pound Sterling has also recorded decent gains against the Swiss Franc (currency:CHF) on the day, sending the GBP CHF exchange rate up to as high as 1.5319. The move was triggered by a sharp weakening of the Swiss Franc following the Swiss National Bank’s overnight announcement that they would be cutting its interest rate on deposits into negative territory. The shift downwards to a rate of -0.25% means that financial intermediaries are charged for holding their funds in Switzerland, making the Franc a significantly less attractive proposition. The euro Swiss Franc exchange rate spiked to close to the 1.2100 threshold straight after the news, and economists forecast that the policy alteration will now make it easier for the Swiss National Bank to maintain its self-imposed minimum floor of 1.2000 on the EUR CHF exchange rate.

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