Near-Term Sterling Forecast and Pound to Euro and US Dollar Exchange Rate Report
Sterling tumbled against virtually all 16 of its major counterparts and dropped to a reach a December low as the week started as UK economic data failed to impress market participants.
It was also a bad day for the UK stock market on Monday with the FTSE 100 closing down 117 points, making a -8.3% decline over the past six days.
A quick foreign exchange market summary before we bring you the rest of the report:
On Friday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.86
At time of writing the pound to euro exchange rate is quoted at 1.162.
At time of writing the pound to us dollar exchange rate is quoted at 1.238.
NB: the forex rates mentioned above, revised as of 19th Apr 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
British Pound Exchange Rate Today
Tuesday was a big day for the British Pound as UK Inflation headlined the economic calendar. UK Inflation fell to its lowest level in 12 years in November as a sharp drop in Oil prices was the primary trigger behind the fall.
The annual rate of Inflation fell to 1% , dropping well below the Bank of England target of 2%, dropping from 1.2% in October as confirmed by the office for national statistics. The fall represents the lowest it has been since September 2002.
Paul Hollingsworth, UK economist at Capital Economics, said inflation would fall further in the months ahead amid low oil prices – which have tumbled 25% to below $60 (£38) a barrel – frozen energy bills and a weak inflationary backdrop.
He said: “While we think that outright deflation will be avoided, it is clear that inflation is set to fall significantly below 1% over the coming months.”
Danny Alexander, the Liberal Democrat chief secretary to the Treasury, described the fall in inflation as an “early Christmas present” for millions of families.
He added: “I am determined that the continuing oil price falls will be passed on to consumers as quickly as possible and in full.”
Pound to Euro Exchange Rate Falls - Forecast for Tomorrow
Following the release the Pound to Euro rate dropped initially from a high at 1.2588 to reach a daily low at 1.2492 but has since recovered to currently trade +0.06% at 1.2580. The Pound still remains resilient but today’s Inflation figure is a reminder no currency is immune to weakness.
Wednesday will also be particularly volatile for the Pound Euro pairing with the latest Bank of England Minutes and Employment change figure due for release following the claimant count and Unemployment data due at 09.30am.
Once again market participants should be cautious of any adverse fluctuations tomorrow, therefore Stop loss orders are advised to avoid against any fluctuations or volatility which is likely.
Update 18/12/2014:
The Pound Sterling to Euro exchange rate advanced by around 0.66% on Thursday morning as British retail sales. came in above forecast.