Looking over a 1-month chart for the Pound to Euro exchange rate, the Pound has gradually climbed in a consistent trend against the Euro.
There has been little volatility, but the GBP/EUR pair have climbed from 1.1500 up to 1.1725 in the space of 1-month, which is an almost 2% increase.
At last week’s European Central Bank (ECB) interest rate decision and statement afterwards ECB President Christine Lagarde opted not to push back against expectations of a rate cut in the first half of the year. The markets are pricing in a rate cut from the ECB as soon as April which is earlier than expectations for the Bank of England.
The Euro weakened because of the language used by Lagarde, and I think we can expect to see further price fluctuations for the GBP/EUR pair if the Bank of England offers indications to when they think rate cuts are likely to begin.
The Bank of England’s first monetary policy meeting of the year will take place on Thursday. At the time of writing the BoE is expected to cut interest rates by 100 basis points this year, whereas the ECB and the FED Reserve in the US are expected to cut rates by 150 basis points.
Sterling has strengthened as a result of this prediction, so any changes to this outlook could influence the Pounds value.
At the last meeting the voting pattern stood at 6 voted to hold with 6 voting to hike rates. If we begin to see a change in sentiment this could also be picked up by the markets and cause a reaction in the Pounds value.
The Pound has begun the week trading just 0.5cents from its annual high against the Euro, and around the highest levels against the US Dollar since late July.
If you would like to plan around Thursday’s key update, and discuss exchange rates with me directly you can email me on [email protected] and I will be happy to offer you some insight regarding your transfer.