GBP/EUR rates have spiked again, following better than expected UK service data earlier this week. This acted as the catalyst to push Sterling back up towards a 7 year high against the single currency. Rates have levelled out today, with the latest Bank of England interest rate decision and monetary policy statement released this morning, causing very little fluctuations in the market. Interest rates have remained unchanged at 0.5% and personally I do fell the Pound will struggle to move back above 1.40 in the short-term.
The UK general election is likely to dominate headlines over the coming weeks and this is likely to create some uncertainty in the market. This could handicap GBP and we may find the EUR benefits from it. We also need to consider the BoE’s stance, which is still that the Pound remains overvalued against the EUR. With factory orders at a two year low, our export industry is suffering and unless this is countered it is likely to cause problems for our on-going economic recovery.
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