EUR/GBP exchange continues to firm following BoE rate cut
The euro pound (EUR/GBP) exchange rate is continuing on its upward trajectory this morning following the Bank of England’s (BoE) latest interest rate decision yesterday afternoon.
At the time of writing, the EUR/GBP exchange rate is trading at around €0.8496, up roughly 0.2% from this morning’s opening rate.
Pound (GBP) undermined by BoE rate cut
The pound (GBP) has remained on the back foot against the majority of its peers this morning following the BoE’s decision to cut interest rates yesterday afternoon.
The central bank voted to loosen monetary policy from its 16-year high of 5.25%, with five of the nine monetary policy members voting for a 25-basis point cut.
BoE Governor Andrew Bailey, who was one of the five MPC members who voted for the cut, commented:
‘Inflationary pressures have eased enough that we’ve been able to cut interest rates today, but we need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.’
Following the release, Sterling experienced a sharp selloff, with the currency reaching some of its lowest levels this morning.
Also applying pressure onto GBP exchange rates is this morning’s risk-off mood. As an increasingly risk-sensitive currency, the pound is further stymied by the downbeat market mood.
Euro (EUR) flat amid lull in data
The euro (EUR) is trading in a narrow range against the majority of its peers this morning amid an absence of macroeconomic data releases from within the Eurozone, leaving the common currency largely directionless.
However, the euro has managed to recoup some of its losses from yesterday, following a duo of disappointing data releases.
The Eurozone’s finalised manufacturing index for July printed at 45.8, remaining in the contraction zone (a reading below 50), while the bloc’s latest unemployment rate unexpectedly rose from its historic lows of 6.4%.
EUR/GBP forecast: BoE speech to drive movement?
Looking ahead, the primary catalyst of movement for the EUR/GBP exchange rate for the remainder of the day will likely be a speech from BoE official Huw Pill.
As Pill was one of the four policymakers who voted to hold interest rates at 5.25%, could any hawkish comments from the rate-setter see the pound claw back some of its losses?
Turning to the euro, a continued absence of market moving data will likely see EUR exchange rates remain trading without a clear trajectory.
However, as a safe-haven currency, should markets remain cautious, the euro could close the week firming against its peers.
