CURRENCY NEWSFLASH : Pound Sterling Hits 7-Year High vs Euro - Further Gains Forecast

January 15, 2015 - Written by John Cameron

STORY LINK CURRENCY NEWSFLASH : Pound Sterling Hits 7-Year High vs Euro - Further Gains Forecast

The Pound Sterling euro exchange rate has jumped to its highest level since the early part of 2008 this morning following a surprise announcement from the Swiss National Bank (SNB). GBP EUR touched 1.3106 on the wholesale market a short time ago following the surprise announcement from the SNB that it is scrapping the self-imposed minimum floor of 1.2000 on the euro Swiss Franc exchange rate which it has maintained for the past three years.

The move brought an immediate strengthening of the Franc, sending the GBP CHF exchange rate down to as low as 1.1170, (the pair had been changing hands at above the 1.5500 level during early trading today). The announcement also brought an attendant weakening of the single currency which propelled GBP EUR to new highs.

Meanwhile, support for the single currency was flaky even before the SNB weighed in. Confirmation from leading European Union lawyer, Advocate General Cruz Villalon yesterday, that he viewed sovereign debt purchases from the European Central Bank as acceptable, apparently paves the way for an announcement of all-out Quantitative Easing from the ECB a week today. In the near-term, GBP EUR has given up a little of the gains it enjoyed in the immediate aftermath of the news from the SNB; the slight pullback represents an ideal opportunity for clients to consider stocking up on euros.

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