Pound Euro Exchange Rate (GBP EUR) Soars Following Draghi And Carney?s Comments

February 7, 2013 - Written by John Cameron

STORY LINK Pound Euro Exchange Rate (GBP EUR) Soars Following Draghi And Carney?s Comments

The euro has been the major loser in the global currency markets during this afternoon’s session, following comments from European Central Bank President Mario Draghi in his post policy decision press conference. Draghi delivered a fervently downbeat assessment of the eurozone’s short-to-medium term economic prospects following his relatively positive words of a month ago. The ECB President stated that recent data for the region pointed to ongoing weakness for the remainder of 2013 and into the first part of 2014 thanks to reduced consumer demand.

However, it was Draghi’s comments regarding levels of inflation in the eurozone which particularly caught the eye. He stated that he anticipates that inflation will dip below 2% in the next few months, a prediction which, in combination with his gloomy forecast for Europe’s real economy, paves the way for interest rate cuts in mainland Europe in the short term.

Meanwhile, Bank of England Governor-in-waiting, Mark Carney, faced the House of Commons Treasury Committee earlier today and his comments proved supportive for the Pound. Carney re-iterated his words of December, when he called for central banks to consider ditching their inflation-target based monetary policies in favour of GDP growth targets for setting interest rates. Carney stated that there was ‘merit’ in considering such changes and the Pound gained as a consequence.

Carney’s assertion, in combination with the Bank of England monetary policy committee’s midday announcement that it would not be adding to the current £375bn allocated to its controversial Quantitative Easing programme, today has proved to be a highly positive one for the Pound against the euro. The Pound Euro exchange rate (currency : GBP EUR), currently stands at 1.1674.

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