The EUR has found support during Thursday’s trading, following a host of key economic data for the UK.
GBP/EUR rates fell below 1.15 at today’s high for the single currency, having hit a low of 1.1762 earlier this morning. Despite the Pound finding support around 1.16, the single currency has once again fought back, after losses earlier this week.
Much of today’s market focus was on the UK economy and the much anticipated ‘Super Thursday’. The Bank of England (BoE) released their latest interest rate decision at Midday and as expected the central bank kept rates on hold at 0.25%. With much talk surrounding the upturn in inflation, with the bank’s target of 2% likely to be hit this month, investors were perhaps expecting an indication that interest rates would be raised soon.
With a 9-0 vote against a rate hike these hopes were dashed, as it seems was investor confidence in the UK’s economic recovery. Despite growth forecast being raised in their Quarterly Inflation report, BoE governor Mark Carney confirmed that investor confidence is down and it seems as though the markets are yet to be convinced that the UK economy can sustain and prosper following our upcoming Brexit.
Last night MP’s voted that Theresa May could start Brexit negotiations as of today and the PM released the governments white paper on how they wish to facilitate our exit from the EU. This paper gave little information away and only reaffirmed what the PM had already said. The markets remain unconvinced and as such the Pound has fallen, with the EUR benefiting from this.
Another reason for EUR strength was the Eurozone’s latest Manufacturing data, which came out above market expectation and helped to boost confidence in the single currency.
With so many unanswered questions I would be wary about gambling on the current market and I still feel Sterling is unlikely to sustain any aggressive gains over the coming weeks.
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