Euro Rate Forecast: Euro to Pound Exchange Rate Weekly Roundup for January 2015

January 18, 2015 - Written by Toni Johnson

STORY LINK Euro Rate Forecast: Euro to Pound Exchange Rate Weekly Roundup for January 2015

The Euro was hammered over the course of the week as expectations as a variety of negative factors coalesced. Expectations were raised that the European Central Bank will introduce quantitative easing at next week’s monetary policy meeting after the Swiss National Bank stunned the global financial markets by slashing interest rates deeper into negative territory and ditched its currency cap against the Euro.

At the start of the week the Euro managed to firm against the Pound as the UK currency was softened by expectations that the Bank of England will not raise interest rates until later in the year. A string of UK data releases has come in below expectations and as such, economists are forecasting that the nation is experiencing something of a slowdown. Gains for the single currency were restrained however, as the upcoming Greek general election and European Central Bank policy meeting draws closer.

On Tuesday, the single currency inched higher against Sterling after UK data showed that inflation in the country slumped to a record low level of just 0.5%. The figure was below market forecasts for a figure of 0.8%. As the session progressed the Pound rallied as Bank of England Governor Mark Carney reassured the markets that a bit of low inflation would likely aid the UK economic recovery.

Midweek the Euro continued to weaken against the Pound, US Dollar and other peers as Eurozone industrial production data came in weakly. The single currency was also dragged lower after European Central Bank President Mario Draghi told a German newspaper that the bank was ready to buy government bonds and said that the region needs an expansive monetary policy in order to tackle deflation and weak growth.

The Euro was hammered against all of its major peers on Thursday after the shock move by the Swiss National Bank plunged the markets into chaos. The move by the SNB also caused investors to heighten their bets that the European Central Bank is planning to announce a full-scale quantitative easing programme at next week’s policy meeting. Fears over the upcoming Greek election are also weighing. Against the US Dollar, the Euro tumbled to its weakest level in 11-years and was in freefall against the majority of its other most traded economies.

As the week ended, the single currency was further battered by the release of data which confirmed that the Eurozone slide into deflation territory in December 2014.

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