GBP EUR Exchange Rate Rises After Carney Commits to BoE Until 2019

Modified: Tuesday, 1 November 2016 13:35 BST - Written by Tim Boyer

STORY LINK GBP EUR Exchange Rate Rises After Carney Commits to BoE Until 2019

The GBP EUR exchange rate advanced by around half a cent this morning as markets reacted positively to the news that the current Bank of England (BoE) Governor Mark Carney would remain in his position into 2019, although it began to dip again later as markets digested the news.

Pound Euro (GBP EUR) Exchange Rate Spikes on Carney News

The Pound (GBP) was bolstered by the news that Carney would remain at the helm of the BoE until 2019. Previous speculation that Carney may leave in 2018, right in the middle of the UK’s ‘Brexit’ negotiations with the EU, caused Sterling to nosedive yesterday.

While he will not be serving his full term until 2021 - as some hoped - investors are relieved that he will remain in his post to steer the bank during the period of uncertainty that will follow as Britain negotiates its split from the EU.

Kathleen Brooks, research director at City Index welcomed the news that Carney would not be leaving in 2018 as she said;

‘The markets are breathing a collective sigh of relief that Carney has extended his term, after all, if he extended it once, could he do so again? The pound has enjoyed a major turnaround, and is the best performing currency in the G10 at the start of this week. It is higher by a decent 0.5% against both the USD and the euro.’

Although she was also wary of Carney’s decision not to serve his full term to 2021, saying that;

‘Carney may still leave the Bank of England at a delicate time for the UK economy, as the government tries to navigate a smooth exit from the EU.’

With the drop in the GBP EUR exchange rate later in the morning it appears that investors have also begun to question how the departure of the Governor will impact the Pound as the UK begins to take it first tentative steps in a post-‘Brexit’ world.

Euro Gains as UK Manufacturing Slows Slightly

The Euro (EUR) has been able to rally against the Pound's recent gains this morning after Markit reports showed that the UK manufacturing PMI receded slightly, dropping to 54.3 in October down from 55.5 the month before.

Although the UK manufacturing sector is enjoying a rise in exports due to the low value of the Pound, it is also facing growing costs as imports of raw materials become more expensive.

GBP EUR Exchange Rate Forecast: Pound May Face Increased Volatility Ahead of BoE Rate Decision

The GBP EUR exchange rate is likely to remain volatile ahead of Thursday’s rate decision from the Bank of England as investors remain uncertain of how the Bank will vote, after comments from UK Chancellor Philip Hammond last week that he would allow further monetary easing if asked by the Bank.

Meanwhile, the Euro lacks any data today to drive movement as investors await Germany’s unemployment figures tomorrow, to gauge whether the European economy is beginning to slow down after Monday's Eurozone GDP data held at 1.6%.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates Euro Forecasts