Pound Sterling Euro (GBP EUR) Exchange Rate Slumps after Damning IMF Comments

July 18, 2016 - Written by John Cameron

STORY LINK Pound Sterling Euro (GBP EUR) Exchange Rate Slumps after Damning IMF Comments

The Pound has slumped greatly against the Euro and most of its other peers today, on account of the latest IMF downgrade of UK predicted growth.

The near-term might see the Pound rise further still against the Euro, should the 'Brexit' affected Eurozone confidence scores for July drop by a greater amount than they are already expected to.

GBP EUR Exchange Rate Strengthens after BoE Hold Rates

The Pound sterling to euro exchange rate slumped to its lowest level for almost three years during the first week of this month as investors fretted over the likely consequences of last month’s vote in favour of Brexit by the UK electorate.

However, last week’s session saw the pair stage a concerted recovery which sent the GBP EUR exchange rate briefly back above the 1.2100 GBP EUR threshold. Analysts forecast that there will be further movement for the pair this week, with two major data releases due in the next 72hrs.

The first comes in the form of June’s UK Consumer Price Index inflation data – due for publication tomorrow. A year-on-year print of above the previous month’s 0.3% result is considered a must for the Pound to continue its near-term improvement against the shared currency.

However, the softening of global oil prices during recent weeks would appear to make such an outcome less likely. Last week’s minutes of the most recent Bank of England (BoE) monetary policy committee meeting suggest that British rate setters will be closely monitoring the result; any drop in CPI inflation will increase the perceived scope for an interest rate cut and potentially a re-ignition of its Quantitative Easing programme by the BoE on 4th August.

Expansion of ECB QE may Provoke Further GBP EUR Exchange Rate Gains

Meanwhile, Thursday’s European Central Bank (ECB) monetary policy announcement is also predicted to prove market-moving for the GBP EUR exchange rate.

The ECB policy board is expected to sit on its hands and maintain all of its three key interest rates at the current ultra-loose levels.

This leaves the post-announcement press conference from Mario Draghi as the main event on the day – any hint from Draghi that the ECB’s existing €80 bn per month asset purchase scheme will be deepened, or even extended, in response to the UK’s decision to leave the European Union would see investors shift out of euro-denominated holdings in their droves.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts