Pound To Euro Exchange Rate Edges Lower Ahead Of Today?s ECB Interest Rate Announcement

Modified: Wednesday, 4 April 2012 09:06 BST - Written by Minesh Chaudhari

STORY LINK Pound To Euro Exchange Rate Edges Lower Ahead Of Today?s ECB Interest Rate Announcement

Yesterday brought some encouragement for the euro when widely-respected financier, Juergen Stark, formerly the Chief Economist at the European Central Bank, cast aspersions on the widely-held belief that the fall-out from a potential full-on debt default by a eurozone nation state, (…Greece, Ireland, Portugal……. take your pick…), could potentially ‘bring down’ the financial system of surrounding states. Stark described the much-vaunted ‘contagion effect’ as ‘overstated’ and suggested that there has never been a high-risk of this occurring.

The euro made healthy gains following Stark’s words, sending the GBP EUR exchange rate down to 1.1967 by yesterday’s close of Europe’s equities markets. The pair had been pushing towards 1.2100 during the early part of the week.

Elsewhere, a report jointly released by leading business analysts / chartered accountancy firm PriceWaterhouseCoopers and the Confederation of British Industry, found that the UK’s Financial Services sector was in rude health. The majority of respondents to the survey reported that they were optimistic about the prospects for this key sector of Britain’s economy, providing a fillip for the Pound.

The eurozone hogs the limelight once again during today’s session, with the release of February’s annualised Retail Sales numbers for the whole region and the European Central Bank’s interest rate decision following at lunchtime. Global shop sales figures for the first two months of the year have been generally disappointing in tone. If this morning’s European numbers follow suit, then the single currency will be primed for a downside move by the time the ECB make their keynote announcement. A surprise cut in the region’s key lending rate by the Bank’s committee can not be wholly ruled out. If this scenario materialises, then the GBP EUR exchange rate is almost certain to break January’s 18-month high of 1.2163 by close of business.

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