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Pound Euro Exchange Rate (GBP/EUR) Strikes 9 ? Month High Then Retraces

October 2, 2013 - Written by Ben Hughes

Euro-negative comments from ECB President Mario Draghi did not stop the single currency pushing ahead against the Pound this afternoon. A vote of confidence in Italy’s government has helped the euro firm during late trading today, sending the EUR GBP exchange rate higher once more.

The Pound to Euro exchange rate (GBP/EUR) is currently trading down by 0.18% at 1.1938 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8377 EUR/GBP.

European Central Bank President Mario Draghi delivered a damning verdict of the state of the eurozone economy and hinted at possible interest rate cuts for mainland Europe earlier today, but the Pound euro exchange rate (GBP/EUR) still dropped. The top man at the ECB stated in his post-policy announcement press conference that the eurozone’s recovery was ‘weak, fragile, uneven’ and repeatedly stated that inflation in the region remained ‘anchored’. This is central bank coded language which signifies that a loosening of monetary policy may be on the cards. The fact that Draghi went on to state that his policy committee had once again discussed the possibility of an interest rate cut highlighted this fact.

The Pound euro exchange rate (GBP/EUR) had made a strong forward move to 1.1999 while Draghi’s press conference was in full swing, but by the European equities close the pair had peeled back to trade down into the 1.1920s. The move lower was caused by a concerted bout of support for the single currency which followed the news from Italy that current Prime Minister Enrico Letta had survived a vote of confidence in the nation’s parliament following a last minute change of heart from erstwhile Prime Minister Silvio Berlusconi. Letta had commented earlier that a vote against the incumbent government in Italy would pose a ‘fatal risk’ to his nation.
Some of the retracement which GBP EUR experienced today was undoubtedly technical in nature – it is no coincidence that the downside move for the pair began when it was trading at 1.1999. The psychologically significant 1.2000 threshold now looks to be a strong level of resistance moving forward.

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