Pound Sterling to Euro GBP EUR Forecast Positive on ECB Draghi Comments

October 22, 2015 - Written by James Fuller

STORY LINK Pound Sterling to Euro GBP EUR Forecast Positive on ECB Draghi Comments

Euro Dives on Dovish Draghi, GBP to EUR Conversion Rate Climbs on Positive UK Retail Sales

Today’s session has brought significant movement for the Pound Sterling (currency : GBP), with the UK unit recording strong gains against the other sixteen most actively traded global currencies during morning trading.

Sterling’s forward move was driven by a considerably better than anticipated set of September British Retail Sales data which revealed that British shoppers had spent 5.9% more last month than in September 2014.

The immediate reaction from market participants saw the Pound Sterling euro exchange rate climb back into the 1.3700s GBP EUR – the pair had been languishing in the 1.3300s as recently as Tuesday of last week.

However, the spike for the Pound triggered by the apparent upsurge in shop sales proved to be short-lived – drilling down into the data, analysts noted that the most recent figures covered the period 30th August – 3rd October thanks to the timing of the August bank holiday weekend.

When these doubts about the actual strength of the numbers surfaced, Sterling gave up a portion of its gains against the other major currencies, with the GBP EUR exchange rate dropping to 1.3657 by lunchtime.

ECB Holds Rates but Considers Future Cuts, Euro Declines

However, there was more volatility to come, with comments that provoked extreme market movement from European Central Bank (ECB) President Mario Draghi this afternoon.

The ECB Supremo used his press conference to announce that his Bank would have to adjust the scope of its ongoing Quantitative Easing programme if economic assumptions deteriorated.

He went on to add further fuel to the flames when he asserted that the euroland’s policy makers had discussed further cutting the ECB’s deposit rate at this week’s policy meeting.

Meanwhile, the headline-grabber from Draghi saw him confirm that his board would ‘re-examine’ its Quantitative Easing scheme at their December get-together; the news prompted analysts to forecast that QE in the Euroland will be extended past its current September 2016 end date before the end of the year.

GBP to EUR Exchange Rate Breaks 1.3800 Today

Draghi’s comments saw the Pound Sterling break into the 1.3800s for the first time since September 23rd this afternoon. Analysts forecast that there could be further near-term gains to come for the pair.

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TAGS: Euro Pound Forecasts Pound Euro Forecasts