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Yesterday morning saw the pound add to the gains made against the euro on Monday after figures showed a rise in the UK inflation figure.
The GBP/EUR cross rose a cent from €1.2458 to a high of €1.2558 on the back of the news, meaning the pound had gained around 1.85% since the middle of last week and is the highest we have seen the currency pair since 4th April.
GBP/EUR weekly exchange rate graph
Some positive news for the UK economy
The inflation reading released by the Office for National Statistics (ONS) showed the Consumer Price Index (CPI) rose to 0.5% last month, up 0.2% from February’s rate of 0.3%. According to the ONS a sharp rise in air fares was the driving force behind the rise, largely due to the early Easter holiday. The increase leaves UK inflation at its highest level since the end of 2014 but is still well below the Bank of England’s target level of 2%.
The Brexit strikes again!
The morning’s gains were short-lived however as focus quickly turned back to the upcoming EU referendum.
In its latest outlook the International Monetary Fund (IMF) warned that if the UK were to leave the European Union it could cause severe global and regional damage. The IMF said a Brexit would harm existing trading relationships and would leave the UK and rest of Europe facing some major challenges.
As we know the referendum has already caused a huge amount of uncertainty for investors and it seems the IMF are taking the stance that an exit will only make matters worse. To rub salt into Sterling wounds the IMF also cut its UK growth forecast. They now expect only 1.9% growth in the UK during 2016 compared with their January prediction of 2.2%.
The news saw the pound lose ground against a basket of currencies and pushed GBP/EUR down back down to €1.2488 before ending the London session back just above €1.25.
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For more information on how we can help or to find out what rate of exchange we can offer, complete the contact form on the right hand side of the page or call us directly on 0044 (0) 1442 892 060.
The only release of note from the UK comes in the form of a Credit Conditions Survey from the Bank of England at 0930.
From the Eurozone we will see the latest Industrial Production m/m figures and the French Final CPI m/m reading. Both are classed as low key eco-stats so are unlikely to have any major impact on the value of the euro.
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