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Pound Euro Exchange Rate Holds Near Impressive Half-Year-Best as BoE Boosts Outlook

Pound Euro Exchange Rate Surges after Bank of England Refuses Negative Rates Signal 

After fairly mixed movement for most of the week, the Pound Euro (GBP/EUR) exchange rate surged higher yesterday. The Pound’s (GBP) bullishness built over the week saw it rocket following the latest Bank of England (BoE) news. 

GBP/EUR opened this week at the level of 1.1291, and the pair has been trending with an upside bias since. After a dip closer to the week’s opening levels yesterday, BoE news pushed GBP/EUR to new highs. 

This morning, GBP/EUR has touched on a new high of 1.1438. This is the best level for the pair in well over half a year, since April 2020. GBP/EUR continues to trend near these highs at the time of writing. 

Pound (GBP) Exchange Rates Surge as Negative Interest Rates Seen Unlikely 

Investors piled into the Pound yesterday, in reaction to the latest Bank of England (BoE) policy decision. 

The BoE left UK monetary policy frozen as expected, and also lowered its Q1 2021 growth forecasts for Britain. 

However, markets were most excited about the bank’s indication that it was giving no signals on negative interest rates, despite recent chatter over the controversial subject.  

According to Edward Moya at OANDA: 

‘The British pound surged after the BOE eased concerns that they were closer to considering negative interest rates. Hope for the best and prepare for the worst is what the BOE is telling the banks. 

The UK economy is turning a corner and their vaccine rollout success should point to a brighter second half of the year.’ 

Euro (EUR) Exchange Rates Continue to be Hit by EU’s Vaccine Woes 

The EU has had problems in securing its promised number of coronavirus vaccines, and the rollout of vaccines across the Eurozone continues to see significant roadblocks and challenges. 

This has caused broad movement in the Euro lately. 

What’s more, the situation in the US is improving by comparison. As the US Dollar (USD) is the Euro’s biggest rival, US Dollar strength is only further weighing on the Euro. 

According to Justin Onuekwusi, Portfolio Manager at Legal & General: 

‘The thing to monitor is how quickly Europe can get out the vaccine. If we see continued slowness there, you will see the gap widen between Euro and Dollar,’ 

Pound Euro (GBP/EUR) Exchange Rate Refocuses on Coronavirus Developments 

With the past week’s influential UK and Eurozone news passed and the Bank of England (BoE) causing a boost in the Pound outlook, the Pound to Euro exchange rate will be driven more by coronavirus developments in the coming week. 

The Pound has the potential to remain appealing for now, especially if Britain’s coronavirus situation continues to improve. 

If Britain’s infection rate continues to soften and vaccines continue to roll out, the Pound will have room to keep gaining. However, the Pound could be knocked instead if Britain’s coronavirus situation worsens or next week’s UK data disappoints. 

Most of next week’s economic calendar will be quiet, but UK growth and production stats on Friday could cause movement if it surprises investors. 

Many key Eurozone stats will be published throughout the week as well. German industrial production, trade balance and inflation stats are due in the first half of the week, and Eurozone production data could influence the Pound Euro (GBP/EUR) exchange rate on Friday. 

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