The GBP EUR exchange rate jumped by over a cent from its worst levels this week as the European Central Bank (ECB) laid out its plans for extending its quantitative easing programme.
Pound Euro (GBP EUR) Surges as Draghi Extends QE to December 2017
The Pound Euro (GBP EUR) exchange rate was bolstered on Thursday as ECB President Mario Draghi announced that the Bank would be extending its stimulus package by nine months to December 2017, three months longer than most analysts had expected.
Despite announcing that the Bank’s asset purchases would be lowered from €80bn to €60bn a month starting in April, Draghi refused to talk about the possibly that the ECB was ‘tapering’ its QE programme, saying;
‘The natural way to look at a word like that is to have a policy whereby purchasers would gradually go to zero, and that’s not been discussed or, as a matter of fact, it’s not even been on the table’
This worried investors as it suggested that the Euro could suffer from a prolonged period of stimulus as the ECB chases its target of 2.0% inflation in the Eurozone, especially as he added that the central bank’s monetary easing was ‘to an extent, open-ended’.
Sterling (GBP) Bolstered by Trade Data
Meanwhile, the Pound rallied further this morning as the UK released is latest trade data showing that Britain’s trade deficit shrank faster than expected in October.
Figures showed that the UK’s trade deficit narrowed from -£13.8bn to -£9.7bn in October, outpacing expectations it would decline to -£11.8bn. This was largely attributed to the rise in exports, driven by the fall of Pound Sterling (GBP) after ‘Brexit’.
GBP EUR Exchange Rate Forecast: UK CPI May Strengthen Pound Next Week
The GBP EUR exchange rate may rise next week if the UK’s latest Consumer Price Index rises from 0.9% to 1% in November as predicted, although an unexpected drop is likely to weigh heavily on Sterling.
The Euro is likely to pressure the Pound later in the week with the release of the Eurozone’s ZEW economic survey, which is forecast to rise from 15.8 to 16.7 in December.
Current Interbank Exchange Rates
At the time of writing the GBP/EUR exchange rate was trending around 1.19 and the EUR/GBP exchange rate was trending around 0.84.
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