Earlier in the month the GBP to EUR exchange rate was trading around the highest levels of 2023 so far, although since then, we’ve seen the Pound drop off and this morning the pair are trading in the 1.12’s.
The GBP/EUR pair climbed above 1.1450 at one stage, so in the space of just a few weeks there has been a gradual decline for the pair, despite the Pound climbing against some other major currency pairs.
Expectations of further interest rate hikes are now more likely according to analysts, and another rate hike at the Bank of England’s next meeting (May 11th) is expected.
Food price inflation in the UK has climbed to the highest levels in 45-years and this is piling pressure on the BoE to continue to adjust monetary policy. Interest rate increases, along with expectations of increases often strengthen the underlying currency as it becomes more attractive to hold assets in.
This pattern of currency strength based on anticipated interest rate increases has materialised for the Pound against the US Dollar for example, as cable (GBP/USD) has climbed by 1.5% over the past month and by over 3% through 2023.
Of the three main currencies of focus within our daily currency blogs (GBP/USD/EUR), the momentum is with the Euro at the moment.
Economic data due out of the UK this week is very light, so perhaps the GDP data releases out of the Eurozone and the US towards the end of the week could potential influence GBP exchange rates depending on whether the releases meet expectations or not.
If you’re planning on making a currency exchange involving the Pound and would like some insight, please feel free to contact me (Joe) on [email protected]
We will be happy to offer quotes and we can also set up rate alerts for clients which can help then take advantage of short-term price fluctuations.