Pound Euro Exchange Rate Outlook Poor after Closing US News

Modified: Friday, 3 June 2016 16:49 BST - Written by Toni Johnson

STORY LINK Pound Euro Exchange Rate Outlook Poor after Closing US News

In a shocking turn of events, the Pound has dived against the Euro on account of the latter currency being bolstered by exceptionally poor US jobs news.

The Pound has remained positive against the Euro today, owing to the lack of real input shown by the ECB into its policy decisions.

European Central Bank (ECB) Keeps Rates Unchanged

This afternoon’s European Central Bank (ECB) monetary policy announcement saw the euroland’s reserve bank leave its trio of headline interest rates at their current level. The ECB also maintained its monthly Quantitative Easing programme at its existing €80bn, as per analysts’ forecasts.

On the economic forecasting front, there was some positive news for holders of the euro (currency : EUR). Mario Draghi, the ECB President, used his post-decision press conference to announce a tangible increase in his Bank’s prediction for euroland economic growth during 2016 from 1.4% up to 1.6%.

He also announced an increase to the ECB’s 2016 inflation forecast from an annualised 0.1% to 0.2%, giving investors some hope that the euro area will now gradually pull away from a potentially decimating bout of deflation.

GBP/EUR Exchange Rate Holds above 1.29

However, Draghi’s warning that he expects the pace of price rises in the euroland to remain low for a long time supressed support for the euro during this afternoon’s session.


The Pound Sterling euro exchange rate had been trading down in the low 1.2800s during morning trading, but Draghi’s downbeat economic assessment saw the pair spike higher to 1.2939 GBP EUR.

A continued move against the shared currency could see the pair settle back above the psychologically significant 1.3000 GBP EUR threshold once more.

Meanwhile, Draghi also had plenty to say about the potential that UK voters will opt for a Brexit on 23rd June. When asked in his press conference about possible threats to the global economy, the first downside risk which the ECB President listed was the UK EU In / Out referendum.

Draghi went on to outline the positive benefits to both parties of the UK’s continued membership of the European Union, stating that, ‘the UK and Europe and the eurozone are mutually beneficial.

The ECB has a view that the UK should remain in the European Union, because the European Union would benefit from its presence. And we believe the UK would benefit from being in the European Union too.’ Whether UK voters heed Draghi’s advice remains to be seen.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts