Yesterday we experience major fluctuations for GBPEUR exchange rates because of the bank of England. The monetary policy committee confirmed that interest rates would remain on hold at 0.5%, but also confirmed that the tightening of interest rates could occur as early as May this year.
At the same time as the interest rate decision the quarterly inflation report was released. The report suggested that if the economy continues at its current pace, wage growth numbers should start to improve and inflation fall, which is good news for the Bank of England. Furthermore the Governor of the Bank of England Mark Carney, suggested that the jobs market will remain strong and unemployment will remain at a four decade low.
Off the back of the news GBPEUR exchange rates broke through 1.1450, however the gains were short lived and investors sold off the pound and exchange rates dropped back below 1.14.
With a Brexit report leaked yesterday suggesting there could be sanctions in place throughout the transition period when the UK leaves the EU, I am not surprised that investors sold off their pounds when the spike in the market materialised.
Today we are set to receive an update from the UK Prime Minister in regards to the negotiations and how they have panned out this week. Personally I expect Theresa May to remain as positive as possible, as her position is under threat at the moment. I wouldn’t be surprised to see the pound finish the week on a high against the euro.
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