Could interest rates be going up this year and the impact on the Pound vs the Euro

GBP EUR Higher Despite Dip in Inflation Figures

The Pound has experienced a good period this week when many expected it to come under a huge amount of pressure caused by the farce of the EU Withdrawal Bill discussions.

We saw members of the SNP walk out on the talks and typically the instability would have caused the Pound to suffer but it appeared as though everyone was waiting for UK Retail Sales as well as the latest ECB meeting.

On Thursday UK Retail Sales came out much better than expected compared to the estimate and this led to the Pound starting the day off very positively against the Euro.

However, the main improvements came from the announcements made by the European Central Bank who confirmed that they would be ending their QE Programme at the end of the year.

The Euro fell on the news as the ECB also cut its growth forecast for this year and suggested that any interest rate hike would not be coming for a very long time and this has encouraged a big sell off for the Euro particularly against the Pound.

Indeed, GBPEUR exchange rates had their biggest positive daily movement all year on Thursday.

Next week the main day to influence GBPEUR exchange rates is likely to come on Thursday when the Bank of England hold their next monetary policy meeting.

The split last month was 7-2 in favour of keeping interest rates on hold and with Retail Sales suprising the markets this could provide some support in favour of a rate hike coming earlier than the market currently expects.

Therefore, if you’re in the process of buying Euros in the short term then keep a close eye out on Thursday as this could cause a lot of movement for the Pound vs the Euro.

If you would like to save money when buying or selling Euros compared to using your own bank then contact me directly for a free quote and I look forward to hearing from you.

Tom holian [email protected]