Pound weaker over Brexit uncertainty: GBP/EUR rate touch the 1.08’s
The pound to euro exchange rate has been falling since Friday when the interbank rate was over 1.12, we have seen it touch the 1.08’s and we are at the time of writing seeing 1.0978. The pound is weaker on the uncertainty over Brexit, with the pound losing value as investors sell the currency. Events on Brexit have been central to the performance of the pound since the EU vote in 2016, and the pound has lost value when it looks like no-deal is becoming more likely. The outlook will have more events to drive the levels today, with the latest release of the Bank of England interest rate decision and also the Quarterly Inflation Report.
Bank of England Interest rate decision, what could happen?
The issue of interest rates has also been a factor for sterling, with the market monitoring developments in the outlook on UK interest rates. Historically speaking, the raising and lowering of interest rates will be a factor for the pound, as investors buy and sell according to their views on whether the currency will become more attractive, or less attractive to hold. The Bank of England is reported to be considering putting the UK on a lower interest rate, to mitigate the possible knock-on effects from a weaker economy. By cutting interest rates, economic theory indicates it will help stimulate the economy.
Other news to be aware of on the euro will be the expectations for the possible interest rates cuts in the Eurozone. Slightly weaker than expected economic growth for the Eurozone released yesterday had seen the euro losing ground. This is all against the expectations that the ECB (European Central Bank) might cut their interest rate in the next September meeting.
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