The British pound sterling exchange rate (GBP) advanced against the US Dollar (USD) last week, rising to a bet conversion above 1.44 in the latter part of the week, while it was a very up and down week versus the Euro.
Last week highlighted just how sensitive foreign exchange (forex), share and stock exchange markets remain to central bank news and there was generally a positive reaction to the raft of monetary easing measures announced by the European Central Bank on Thursday, which exceeded initial expectations. Read today's update to this news article.
The Euro vs dollar exchange rate fell sharply and we saw a best conversion of 1.3070 on the GBP to EUR in the immediate aftermath of the announcement to cut interest rates to zero and extend quantitative easing measures to €80 billion a month.
Bond yields also moved lower and stocks rallied but that was all before the ECB President Mario Draghi began speaking.
During the press conference that followed 45 minutes after the announcement, Draghi indicated that there was a limit to ho far the ECB could go with negative interest rates without having consequences for the banking system.
In today's news, the USD exchange rates are strengthening against the euro and British pound in anticipation of an upbeat outlook on global economic stability from the subsequent press conference.
Most forecasters do not expect a rate hike as a result of the next Federal Reserve policy meeting, taking place on Wednesday.
According to Diane Swonk, DS Economics Chief Economist, ‘Financial markets have stabilized a bit, but the situation abroad still looks worse than in the United States. The Fed will give some signals that they feel better about where things are now compared to January but also signal that they don't have an itchy trigger finger in terms of raising rates.’
Breaking News & Forecasts
Latest Pound/Euro/Dollar Exchange Rate Conversions
On Monday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.855
At time of writing the pound to euro exchange rate is quoted at 1.169.
The GBP to USD exchange rate converts at 1.254 today.
The live inter-bank GBP-AUD spot rate is quoted as 1.909 today.
Please note: the FX rates above, updated 29th Apr 2024, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
ECB policy decision caused significant market volatility last week, but has the central bank finished its easing cycle?
Draghi also said that he did not anticipate any further rate cuts, with any additional easing likely to compromise non-standard measures, such as further quantitative easing.
In short, Draghi said the ECB was done with easing monetary policy and if the latest measures didn’t work, then nothing would. His overall statement was taken as a clear signal that interest rates have reached the lowest level, which caused the market mood to change altogether.
The Euro came soaring back against the majors, rising more than 2% against the Pound and the U.S Dollar on Thursday afternoon. Stock markets fell back into negative territory, while oil prices rose above $40 a barrel last week to cap a remarkable recovery from the January lows around $26 a barrel with some investors even suggesting that the move higher is underway.
Improved risk appetite saw AUD, NZD and CAD exchange rates climb last week.
The overall improvement in risk appetite is evident in the recent performance of the higher-yielding currencies with the Australian Dollar, New Zealand Dollar and Canadian Dollar posting widespread gains against the other major currencies over the past month. This a trend that is likely to continue providing risk sentiment holds firm.
The main focus this week will inevitably be the FOMC meeting, although no change to U.S interest rates is expected until the fourth quarter and even that will depend upon the global economic outlook as much as the domestic performance.
In the U.K, the BoE also meets this week, with another unanimous decision to keep interest rates on hold more than likely.
GBP, EUR and USD Related Data Released 14th March 2016
EUR 10:00 Industrial Production (January)
New Telegraph Brexit Poll Weakens GBP/EUR, GBP/USD Rates
Those who support a Brexit are more motivated to vote, according to the latest poll from the Daily Telegraph, which has weakened Pound Sterling against the Euro and US Dollar.
The poll found that, while the Brexit campaign had a 2% lead over supporters of the EU, in terms of those who are definitely intending to go out and vote in the referendum, those wishing to leave the EU outnumber those who do not by 52% to 45%.
Today's Pound to Euro News: Bookmakers Keep Brexit Odds at 33% while GBP Weakens
Today’s Daily Telegraph poll may have caused GBP to plummet, but bookies are economists are apparently much more confident that the ‘Remain’ campaign will win, with bookies leaving the odds of a Brexit at 1 in 3.
According to Currency Analyst Kit Juckes of Societe Generale, ‘The uncertainty around the credibility of polls, and the margin for error within them, means that we are very unlikely to have confidence about the outcome before the vote takes place, and I'm not going to be bullish on sterling during that period.’
Boris Johnson and one-time Labour leadership candidate Chuka Umunna have muddied the waters on the Brexit with an argument via a radio phone-in which has seen both sides accused of hypocrisy, further weakening GBP.
Umunna denied that he had previously claimed 50% of UK laws come from the EU, although written evidence later surfaced to verify those accusations, while a quote from Boris Johnson from the beginning of February showed that he had described renegotiating trade deals with the EU - something he is currently claiming would be simple - as a ‘fiddly process’ lasting ‘several years’.