Pound Rockets Against Euro (EUR) & Dollar (USD) Exchange Rates as Sterling up on BoE's Interest Rate Hints

Modified: Thursday, 12 June 2014 23:59 BST - Written by John Cameron

STORY LINK Pound Rockets Against Euro (EUR) & Dollar (USD) Exchange Rates as Sterling up on BoE's Interest Rate Hints

POUND EURO RATE UPDATE 23:45 GMT 12th June 2014 - The British Pound Sterling has rocketed against the Euro exchange rate this evening as the Bank of England's Mark Carney gave his strongest signal to date that the interest rates will rise sooner than markets anticipate. The GBP EUR currncy pair is currently sitting just shy of 1.25, a rate not seen since October 2012. Forecasts suggest this could advance yet further if the Euro zone delivers any more bad economc news. Friday 13th June sees the German, Italian and Spanish Consumer Price Index and the EU Emplyment Change reports.

On Thursday at 23:45 GMT, the BoE bomshell has caused the Pound Euro exchange rate to jump 0.72pct today and now sits at 1.24941 GBP/EUR. The Pound Dollar exchange rate is also trading 0.83pct higher at 1.69303 GBP/USD.

The Pound Sterling limped to a fresh 19-month high against the euro during early trading this afternoon as investors hoovered up Sterling-denominated assets following the release of strong UK industrial production numbers.

The official figures showed that the output of Britain’s combined industries expanded at its fastest rate since 2011 last month – a year-on-year 3.0%. Additionally, UK Manufacturing Production grew at an even quicker annualised level of 4.4% during the same period, adding further credence to analysts’ belief that the domestic economic recovery is now picking up momentum.

The Pound eclipses last weeks highs against the Euro exchange rate

As if to provide a counterbalance to the UK data, Italian GDP numbers, also out this morning, pointed to a year-on-year drop of some 0.5% in activity levels in the troubled Mediterranean economy. The upshot of the publications saw the Pound Sterling euro exchange rate eclipse last week’s high of 1.2400 – just about – by touching the 1.2401 level.

The new high confirms the pair’s current uptrend which has been in place since July of last year and the move could be set to continue if Credit Agricole strategist Nark McCormick is to be believed. He stated yesterday that the, “euro will probably, on a broad basis, slide lower, especially given the aggressive easing policy put in place by the ECB.”

With economists expecting the European Central Bank to maintain ultra-low interest rates for some considerable time to come, the eurozone remains drastically behind the curve when it comes to monetary policy. Conversely, rumours are rife that the Bank of England and US Federal Reserve may be set to increase their respective interest rates during the first half of 2015. The upshot could send Pound Euro rate spiraling while the EUR USD exchange rate tumbles. The key level moving forward for GBP EUR now comes at July 2012’s 5 ½ year high of 1.2894.

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