EUR/GBP Exchange Rate Advances in Run up to BoE Policy Decision
The Euro Pound (EUR/GBP) exchange rate is accelerating this morning as Sterling is undermined by some disappointing economic data ahead of the Bank of England’s (BoE) rate decision later today.
At the time of writing EUR/GBP exchange rate is down by around 0.2% this morning, following the release of the UK’s latest trade and production figures.
Euro Pound (EUR/GBP) Exchange Rate Advances as UK Trade Deficit Swells
The Euro Pound (EUR/GBP) exchange rate appreciated this morning, following the publication of some lacklustre UK trade figures.
According to data published by the Office for National Statistics (ONS) the UK’s trade deficit swelled from -£1.17bn to -£3.09bn in March.
This was much worse market forecasts that the UK’s trade balance would slump to -£2bn and was the largest deficit since last June, with investors particularly worried about the 2.2% slump in exports.
The ONS said:
‘The UK trade in goods deficit with non-EU countries narrowed £1.5 billion to £9.9 billion in the three months to March 2018, while the deficit with the EU widened £0.4 billion to £24.7 billion over the same period.’
Further denting the appeal of the Pound were the accompanying industrial production figures, which revealed factory output expanded only 0.1% in March, disappointing markets who had expected production to tick up to 0.2%.
The disappointing data also added further support to the UK’s latest GDP estimate which suggested the UK economic got off to a slow start in 2018.
EUR/GBP Exchange Rate Forecast: Markets Brace for BoE Rate Decision
Looking ahead movement in the EUR/GBP exchange rate is likely to be dominated by the Bank of England’s (BoE) latest rate decision later this afternoon.
Analysts predict today’s policy meeting will conclude with policymakers voting to leave interest rates on hold, in a major reversal from just a month ago when a rate hike looked inevitable.
However while a hike may longer be on the table this month, the Pound may still be able to mount a recovery if the BoE still appears open to the possibility of hiking rates later in the year.
Meanwhile the Euro could see some losses at the tail end of this week’s session following a speech by European Central Bank President, Mario Draghi, with economists concerned the recent slide in Eurozone inflation will prompt Draghi to strike a more cautious tone.
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