With the Bank of England due to meet on Thursday we could see GBPEUR exchange rates move quite a lot during Thursday afternoon’s trading session.
Clearly there is almost no chance of the central bank changing interest rates tomorrow but the rhetoric used with the following meeting could cause a lot of movement for Sterling exchange rates.
UK inflation remains a problem for the UK economy and this is one of the main reasons for the rate hike used at the end of last year, which brought interest rates in the UK back up to pre-referendum levels.
There have been some suggestions in recent times that the UK will look to hike interest rates and although I don’t think this will happen anytime soon we could see an interest rate hike coming towards the end of this year.
If there is any mention that we could see a change in monetary policy in the longer term then I think we could see a positive movement for the Pound coming on Thursday afternoon.
Prior to the central bank’s meeting the Eurozone’s economic powerhouse Germany will release its latest Industrial Production data tomorrow morning followed by the Trade Balance data due out early Thursday morning.
If we see a strong release during the next two days this could keep Sterling under pressure and may provide clients with a good short term opportunity to sell euros into Pounds before the Bank of England’s meeting on Thursday afternoon.
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