The Pound has had a good end to the week vs the Euro after much better than expected UK Retail Sales data which were published on Thursday morning.
The better weather caused Retail Sales to jump higher than the estimated figure and this in part caused the Pound to have the biggest improvement against the Euro in one day all year.
The good news was further exacerbated by the European Central Bank’s announcement to end their QE programme in December.
The previous expectation was to end it in September so to carry it on until December caused the Euro to weaken.
The further losses for the Euro came when the central bank suggested that any interest rate hike may not be coming for a very long time and this also panicked investors which caused the Euro to come under pressure against a number of different currencies including vs the Pound and the US Dollar.
With the US having raised rates twice this year and seven times since December 2015 this caused a big sell off from the Euro and into the US Dollar.
As we go into next week the big day in terms of movement is likely to come on Thursday when the Bank of England hold their latest interest rate meeting.
Previously the Bank of England kept interest rates on hold with a 7-2 split but with Retail Sales showing a massive improvement this could potentially provide some evidence in favour of hiking interest rates in the future.
I personally still think a rate hike is a long way away but if there are any hints that one may be coming then this could potentially send GBPEUR exchange rates up towards 1.15 if the news is positive next Thursday.
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Email me Tom Holian [email protected]