Pound Euro Exchange Rate News: GBP/EUR Slumps Further Following Dovish BoE Comments

Modified: Tuesday, 29 March 2022 09:05 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate News: GBP/EUR Slumps Further Following Dovish BoE Comments

Pound (GBP) Struggles in the Wake of Dovish BoE Comments

The Pound (GBP) is slipping against the Euro today, in the wake of a comments by Bank of England (BoE) Governor Andrew Bailey. In a speech titled ‘Macroeconomic and Financial Stability in Changing Times’ Bailey reiterated the BoE’s cautious outlook on monetary policy in light of the war in Ukraine.

When asked about the possibility of another interest rate hike in May, bailey noted the situation remains highly volatile.

Bailey said: ‘We have been very cautious on forward guidance language because things are so uncertain.
‘Will take time before we really come to a proper assessment of how the joint experience of COVID and Ukraine invasion causes world economy to emerge into new steady state.
‘We are at an even more challenging point for global economy than after the global financial crisis.’

Bailey also warned that there is evidence that UK economic growth is starting to slow as inflation bites.

Bailey continued: ‘In the UK and elsewhere, we are facing a very large shock to aggregate income and spending. Unfortunately, there is more to come on inflation shock.

‘The shock from energy prices this year will be larger than any single year in the 1970’s.’

The Euro (EUR) Buoyed by Renewed Peace Talks

The Euro is strengthening against the Pound this afternoon after the Kremlin announced peace talks are to be held in Turkey on Tuesday, boosting the market mood over the ongoing Ukraine crisis.

Coupled with dropping oil prices, the single currency could see further upswings as it looks to make up more ground against the Pound.

This provided a much-needed tailwind for the Euro after sentiment in the German economy collapsed last week after the ifo Business Climate Index was published, denting the single currency. The drop was a record collapse, surpassing the 11.8-point drop at the outbreak of the coronavirus crisis in March 2020.

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TAGS: Pound Euro Forecasts