The Pound has risen today, following the release of some very positive manufacturing numbers which were better than the market was expecting. Manufacturing activity forms a large part of the UK's GDP, so the strong figure showing 0.7% growth has pushed the Pound higher. Here is how GBP/EUR has moved so far this week:
As you can see, it's been a topsy turvy week, with lows of €1.28 and highs of nearly €1.30, which is where we currently sit following this morning's positive data.
Mark Carney comments affect the Pound
Yesterday caused some swings, after the Bank of England's governor Mark Carney spoke about the EU referendum. The BoE are neutral with regards to providing support for either camp, and Carney was trying very hard not to lean one way or the other. He was unable to avoid questions on the issue however, and he stated that the UK leaving the EU is the biggest risk to financial stability. He also said that the relationship with the EU had helped the UK to grow. So while not explicitly outlining his position on the issue, the negative comments about the uncertainty the issue will create did not go unnoticed by the markets, and the Pound fell through much of yesterday's trading session, before picking back up later in the afternoon.
He said that an independent UK would struggle to control inflation and a fall in the Pound, in addition to questions over financial and monetary stability. This does reinforce the view that the whole EU vote is a huge unknown, and there are significant downside risks that could cause the Pound to fall in value, and cause exchange rates to drop sharply.
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What could move the Pound/Euro rate for the rest of the week?
This afternoon at 3pm we have a UK GDP estimate, which is a good indication of growth. Recently the number has been at around 0.4%, so any change to this might affect the value of the Pound.
Tomorrow we have the ECB potentially announcing an expansion of their stimulus package. The markets are already geared up for this, and so it may already be priced into the market. However if we do see an extension of their measures, it could cause a temporary spike in GBP/EUR rates. A lack of any action would cause the exchange rate to fall.
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Labels: Bank of England, Best Currency Rates, Best Euro exchange rates, EU referendum, GBP/EUR, Mark Carney, Outlook for Pound/Euro, pound sterling forecast
