- UK currency fluctuates as IMF report continues to unnerve investors
- Stakes are raised for ‘Brexit’, lack of UK data compounds issue
- Euro slumps as industrial production stats exceed worse forecasts
- BoE interest rate news to shift GBP tomorrow
The Pound Sterling (GBP) has been an unstable bet for investors today, with losses primarily coming from recent comments made by the International Monetary Fund (IMF) over the results of a UK exit from the EU.
The Euro (EUR), meanwhile, has essentially tanked across the board due to the outcome of the morning’s major Eurozone economic announcement.
UK Economic News: Lack of Impactful UK Data Leaves IMF Comments High in Investor Focus
The appeal of the Pound Sterling (GBP) has been decidedly mixed across the board today, owing to the varied reaction to the most recent IMF announcement.
This has been the IMF’s recently-released World Economic Outlook, which has given particular attention to the potential outcome of a UK exit from the EU.
The headline-grabbing forecast was that:
‘The planned June referendum on European Union membership has already created uncertainty for investors. A ‘Brexit’ could do severe regional and global damage by disrupting established trading relationships.’
The news was met with a mixture of concern, scorn and scepticism, with the UK Chancellor falling in the first field, calling the outlook ‘the clearest independent warning of the taste of bad things to come if Britain leaves the EU’.
On the opposite end of the scale were ‘Leave’ campaigners and media outlets, which labelled the announcement as yet another case of scaremongering among supporters of the European Union.
The Chief Executive of Vote Leave, Matthew Elliot, issued a statement that:
‘The biggest risk to the UK’s economy and security is remaining in an unreformed EU, which is institutionally incapable of dealing with the challenges it faces, such as the Euro and migration crises’.
Sterling has risen by 0.6% against the Euro (GBP/EUR) and 0.7% against the Swiss Franc (GBP/CHF) today, but has otherwise fallen by -0.3% against the South African Rand (GBP/ZAR) and trended in a tight range elsewhere.
Euro (EUR) Flops after Industrial Production Ecostats
The single currency has essentially dropped off against its peers today, owing to a less-than-ideal outcome for the industrial production result for February.
Although reductions had already been forecast, the actual losses from 1.9% to -0.8% on the month and from 2.9% to 0.8% on the year exceeded the worst expectations.
Pantheon Macroeconomics issued a statement in response to the data, calling it ‘a downbeat report, but not catastrophic’.
Elsewhere in the single currency bloc, the Euro was granted slight relief by the earlier positive French finalised inflation rate stats, although the Spanish variant was not so supportive overall.
Additionally, a speech from European Central Bank (ECB) official Vitor Constancio has offered some small amount of solace to investors in the Euro, as the policymaker has recently stated in a speech that ‘helicopter money’ is not among the proposed tools to be used by the ECB. Unfortunately, the official and his peers did not specifically identify the strategies that they would be planning to use to improve the Eurozone’s stability.
Euro losses today have consisted of -0.3% against the Australian Dollar (EUR/AUD), -0.5% against the Pound Sterling (EUR/GBP) and -0.8% against the South African Rand.
Future GBP, EUR Forecast: ECB Speech and BoE Interest Rate Decision due in Near-Future
The next movement likely for the GBP/EUR pairing is set to come from the Euro (EUR) side, with a speech being made by ECB member Ewald Nowotny in New York tonight.
Following on from this tomorrow will be Germany’s wholesale price index for March, as well as the Eurozone-wide inflation rate outcomes for the same month.
In the latter case, forecasts are currently for a rise on the month and the year for the base finalised forms, while stagnation at 1% is expected to come for the Core printing.
For the UK, noon tomorrow will bring the Bank of England (BoE) interest rate decision, which is expected to show another rate freeze at 0.50%.
Of greater interest to investors will be the BoE’s minutes, which could reveal any planned responses to the increasing instability caused by the looming UK Referendum vote.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2594 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7942 today.
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