GBP/EUR exchange rates have once again had a fairly stable week, with very little in terms of U.K economic data for the market to feed off of and the European Central Bank interest rate decision and press conference throwing up no major surprises during the trading day yesterday.
This now poses the question of where the pairing will head next, and my personal opinion at present is that the Bank of England interest rate decision on Thursday of next week will be key for the next movement for the pairing.
At present it does look like we may be seeing a rate hike from the Bank of England but this certainly is not set in stone. Lower than expected inflation figures recently along with Brexit concerns have slightly dampened expectations from some analysts.
In general an interest rate hike is seen as positive for the currency concerned and a cut in rates usually negative, so should we see a move from the Bank of England next week then it would be likely to give the Pound a little strength.
Many other economic areas are now making moves to raise interest rates so the U.K is at risk of being left behind if we do not see a move soon, a higher interest rate makes a currency more attractive to investors so no progress once again from the Bank of England next week may lead to Sterling weakness.
The GBP/EUR pairing has been stuck in a reasonably tight range since October now and there must surely come a point soon where we will see a break out. U.K politicians are now on their summer reccess so you would hope this may keep Brexit problems a little quiet for a few weeks and should we see a rate hike then eyes may turn back to economic performance and I feel we would see the Pound see an uplift because of this.
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