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GBP/EUR Higher as BoE Comments Boost Rate Hike Optimism

Last week’s high: €1.1357

Last week’s low: €1.1225

Pound Accelerates on Saunders Comments

Sterling initially weakened against the Euro last week as a dip in the UK’s latest CPI figures confirmed that inflation slowed last month, as expected.

The Pound’s fortunes reversed in the middle of the session however as comments from the Bank of England’s (BoE) Michael Saunders regarding a possible uptick in wage growth in 2018 were well received.

GBP/EUR dipped from its best levels at the tail end of the week as UK retail sales came in well below expectations.

Meanwhile, the Euro suffered slightly last week as European Central Bank (ECB) officials moved to curb some of the recent speculation regarding its plans for tapering its quantitative easing programme this year.

Sources at the bank told Reuters that no changes to monetary policy would be made until at least March, when the bank receives its latest financial assessment.

Two policymakers even went so far as to state that the recent surge in EUR/USD was ‘concerning’ and ‘not helpful’.

Euro Outlook: Eurozone’s Strong Economic Performance to Continue into 2018?

Looking ahead to this week, the GBP/EUR exchange rate may slide in the first half of the session, with economists forecasting the latest PMI figures will show that the Eurozone continued to expand at a robust pace at the start of 2018.

However, it may be the ECB’s rate decision on Thursday that has the biggest impact on the Euro this week, with investors paying close attention to the tone adopted by ECB President Mario Draghi.

The Pound could also find some support this week with the UK’s latest GDP and employment figures both likely to bolster Sterling if they perform as expected.

Key Events

23rd January

10:00 DE Economic Sentiment Index

10:00 EU Economic Sentiment Index

24th January

09:00 EU Manufacturing PMI

09:00 EU Services PMI

09:30 UK Unemployment Rate

09:30 UK Wage Growth

25th January

12:45 EU ECB Rate Decision

26th January

09:30 UK GDP Q4

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

James Baxter

Currency Dealer

T: (0) 1442 892 062

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