With the dust settling following a data-heavy trading session and two central bank rate decisions, the Euro was left close to a one-year low against the Pound.
Earlier in European trading the Euro had strengthened as a result of improving economic confidence in the Eurozone and an impressive surge in German factory orders.
The Pound, however, had been fighting its corner against its European cousin as the UK’s rosier economic outlook, narrowed goods trade balance and bland BOE rate decision increased the appeal of the British currency.
As expected by economists, the Bank of England opted to leave policy unchanged.
The European Central Bank also decided to leave interest rates untouched, refraining from carrying out the threat of introducing negative interest rates, a concern which has been hanging over the Eurozone since last year.
However, in the press conference following the ECB decision, President Mario Draghi issued some cautious comments.
Draghi mentioned the two issues which could push the central bank into cutting interest rates further, ‘unwarranted tightening of the short-term money markets’ and ‘a worsening of our medium-term outlook for inflation’.
The ECB chief also asserted; ‘The Governing Council strongly emphasises that it will maintain an accommodative stance of monetary policy for as long as necessary.’
In Draghi’s view, while the Eurozone’s tentative return to growth is no longer being entirely driven by export growth it’s ‘still premature to declare any kind of victory’.
The Euro posted widespread declines after the press conference and the EUR/GBP exchange rate is close to a one-year low today.
Although economic data for the Eurozone is lacking tomorrow, further EUR/GBP movement could occur before the weekend as a result of UK construction/manufacturing/industrial output figures.
A surprising US non-farm payrolls report could also drive market volatility.
Euro (EUR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
US Dollar,
Australian Dollar,
Euro,
Euro,
Euro,
Euro,
Euro,
[/table]
