Pound to Euro Recovers from Worst Conversion on 2016 Brexit Bets

January 11, 2016 - Written by Frank Davies

STORY LINK Pound to Euro Recovers from Worst Conversion on 2016 Brexit Bets

Pound Sterling to Euro Exchange Rate Update: GBP Hits 11-Month Low VS EUR, over 5-Year Low against USD

After plummeting to an 11-month low towards the close of last week, the pound to euro exchange rate was able to recover some of its recent losses.

The GBP/EUR currency pair climbed from a low of 1.3252 to a high of 1.3417 on the back of bets that the UK’s in-out European Union referendum will be held this year.

When the Conservative party was voted into power in May 2015 they promised to hold an in-out referendum on the subject of the UK’s membership of the EU by the end of 2017.

UK EU Referendum Could Be Held in 2016, Prospect Boosts Pound (GBP) Trading

As markets hate uncertainty, hints that the vote could be held this year have been well received, although it is currently unclear which way the British public might swing.

Although UK Prime Minister David Cameron has intimated that he doesn’t feel a UK exit from the institution is in the nation’s best interests, he did imply that the referendum could be held this summer.

When questioned on the likelihood of that occurring he said; ‘That is what I would like to see, is a deal in February, then a referendum that would follow.’

EUR/GBP Exchange Rate News: Euro to Pound Trending Lower as Confidence Declines

Demand for the Euro, meanwhile, eased after a gauge of confidence for the Eurozone disappointing expectations by printing at 9.6 in January rather than the 11.4 expected.

This was down from a reading of 15.7 in December.

In a statement Sentix noted; ‘There are dark clouds coming up from the East… Because serious doubts are justified that China is not only experiencing a growth slowdown, but possibly a really hard landing.’

While the Sterling-Euro was able to gain 0.8% on Monday, the Pound Sterling to US Dollar conversion rate was also able to climb by 0.4%.

GBP/EUR Exchange Rate Forecast Depends on BoE Meeting Minutes

While Tuesday’s UK Industrial and Manufacturing Production data is likely to have an impact on GBP/EUR exchange rate trading, investors with an interest in the pairing will also be looking ahead to Thursday and the Bank of England’s (BoE) latest monetary policy meeting.

While the central bank is highly unlikely to make any alterations to either interest rates or the level of asset purchases at this juncture, the minutes from the meeting will offer an insight into the minds of policymakers in reference to the future path of interest rates.

If it appears that policymakers are happy to leave interest rates on hold for the foreseeable future, the Pound is liable to decline against peers like the Euro and US Dollar.

However, any hints that they’d still like to see borrowing costs move higher in 2016 would be positive for Pound Sterling (GBP) exchange rates.

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TAGS: Daily Currency Updates Euro Forecasts Pound Sterling Forecasts