Pound Euro Exchange Rate Forecast: GBP/EUR Losses Predicted If BoE Minutes Disappoint

Modified: Wednesday, 19 February 2014 10:00 BST - Written by Frank Davies

STORY LINK Pound Euro Exchange Rate Forecast: GBP/EUR Losses Predicted If BoE Minutes Disappoint

The message from yesterday morning’s official UK inflation figures was that the rate of British price rises is dropping at a faster pace than analysts had been anticipating. The January numbers, published by the Office of National Statistics shortly after the start of the European equities session, revealed that inflation had dropped to below the UK government’s 2.0% target for the first time in over four years last month.

The Pound Sterling to Euro exchange rate is trading up +0.09% at 1.21367 GBP/EUR. The Euro to Pound Sterling exchange rate is trading down -0.09% at 0.82395 EUR/GBP.

The Pound registered losses against the majority of the other sixteen most actively traded global currencies as a result. The Pound euro exchange rate (GBP/EUR) fell back on the day from above the 1.2200 threshold to an intraday low of 1.2132 by the early stages of the New York session, in spite of a significantly weaker than expected print from this month’s edition of the closely-watched German ZEW index. Meanwhile the Pound US Dollar exchange rate (GBP/USD) also peeled back from the multi-year highs which it struck earlier in the year.

The Pound New Zealand Dollar Exchange Rate Edges Higher Touching 2.0100 GBP/NZD.

One of the few currencies to give up ground against Sterling on the session was the New Zealand Dollar, meaning that the GBP NZD exchange rate edged higher to briefly change hands at above the 2.0100 threshold. The Kiwi registered losses against the Pound thanks to arbitrage trading from institutional investors following the Reserve Bank of Australia’s minutes, published during the early hours of Tuesday morning. The RBA made it clear in its monthly missive that it now considered the Australian Dollar to have weakened to a manageable level and that it was not seeking any further drop in its relative value. The Aussie gained against the Kiwi as a result and the broad sell off of NZD-denominated assets sent GBP NZD higher.

Looking ahead, the Pound is forecast to record further losses if this morning’s Bank of England minutes back-up the UK central bank’s recent assertion that, with UK inflation falling back, a hike in Britain’s base rate is still a long way off.

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