GBP EUR Exchange Rate Flat as Balls Calls for Central Bank Reform

November 17, 2016 - Written by Minesh Chaudhari

STORY LINK GBP EUR Exchange Rate Flat as Balls Calls for Central Bank Reform

The GBP EUR exchange rate has continued trading relatively flatly today as former Labour MP Ed Balls called for reforms to central bank policies in light of the ultra-low interest rates offered by the Bank of England (BoE) and the European Central Bank (ECB).

Balls calls for Central Bank Reforms, Pound Sterling (GBP) Exchange Rates Static

The Pound Euro exchange rate has remained stable as the former shadow chancellor took some time away from the dance floor to release an academic paper that called for the BoE’s and other central bank’s independence to be reined in in the face of rising ‘popular discontent’.

Markets have become increasingly upset by some central banks' refusal to raise interest rates despite growth in domestic economies, with president elect Donald Trump previously threating to remove Federal Reserve Chair Janet Yellen over the Fed's refusal to raise rates.

While Balls did admit that;

‘The low interest rate policy over the last few years is the only thing that has stopped our economy slipping back into depression.’

He suggests a model central bank would still retain its vital independence but that its power would be less centralised to make sure it remains accountable.

While many analysts appear to agree with his statement, it has had little impact on the GBP EUR exchange rate as neither the BoE nor the ECB has publicly commented on the paper.

Pound Euro (GBP EUR) Exchange Rate Flat Despite Surge in Retail Sales

The Pound has failed to make any notable advances against the Euro despite a significant rise in British retail sales, as they soared from 4.0% to 7.6% in October, rocketing past predictions of 5.3%.

The rise is being largely attributed to weather as Kate Davies, an ONS senior statistician, explains;

‘Cooler temperatures in October boosted clothing sales as shoppers took their cue to purchase winter clothing, while the supermarkets benefited from Halloween. This has also coincided with the strongest growth in internet sales seen for five years.’

Ongoing 'Brexit' fears are being blamed for the Pound’s lack of gains from the impressive data, as Foreign Secretary Boris Johnson recent commented that Italy would lose prosecco sales if the UK was denied access to the single market back fired.

As Carlo Calenda, Italy’s economic development minister fired back, ‘the difference is I'm going to lose [exports] to one country, you to 27’.

GBP EUR Exchange Rate Forecast: Investors Hope to hear if ECB will Extend its QE Programme in Draghi Speech

The GBP EUR exchange rate may continue to trend flatly tomorrow due to a lack of notable ecostats, although a speech by Mario Draghi, President of the ECB, at the Euro Finance Week in Frankfurt, could cause some movement in the currency pairing, if he makes some indication to the ECB’s plans for its quantitative easing programme. Any suggestion that the Bank is seeking to extend it past March 2017 in likely to cause the Euro to tumble.

Current Interbank Exchange Rates

At the time of writing the GBP EUR exchange rate was trending around 1.16 and the EUR GBP exchange rate was trending around 0.86.

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TAGS: Euro Forecasts Pound Euro Forecasts