Pure FX Logo arrow Reviews On Feefo Pure FX Logo Exemplary Service In-Depth Knowledge We're Jargon Free Same-Day Transfers Better Exchange Rates Purefx_currency_exchange Personal Transfers Business Transfers Personal Service Trusted Brokers Get A Quote Register With Us Make A Transfer Seller Transfers Contract Definitions Read Our Top Tips What Influences Exchange Rates Glossary Frequently Asked Questions Contact Us

Euro Rates Today Near 3-Week High, as BoE Tipped to Cut

Market CommentaryEuro Rates Today Near 3-Week High, as BoE Tipped to Cut
Euro Rates Today Near 3-Week High, as BoE Tipped to Cut
Euro to The Pound.

The euro to pound interbank exchange rate stands at 0.8591 today. This is its highest in close to three weeks, or since December 25th.

By comparison, back on January 1st, the Eurozone’s common currency was as weak as 0.8437 versus sterling, so it’s since strengthened by over 1.5 cents, or by 1.82%.

One partial explanation why the EUR to GBP interbank exchange rate continues to rise is because the Bank of England (BoE) is being increasingly tipped to cut UK interest rates in January.

According to markets, there’s now a 52% chance that the central bank will reduce UK borrowing costs below their current 0.75% to 0.5% this month, up from a 5% chance earlier.

In part, this is because a number of BoE policymakers have made comments, suggesting that they might vote to cut UK interest rates, if Britain’s economy doesn’t pick up soon.

Carney Says Weak UK Growth May Prompt “Relatively Prompt Response”

For example, speaking at a BoE Research Workshop last Thursday, BoE Governor Mark Carney said that, if UK GDP (Gross Domestic Product) doesn’t accelerate in early 2020, this could prompt a “relatively prompt response” from the central bank.

His BoE colleagues Silvana Tenreyro and Gertjan Vlieghe echoed his comments in the days after. Back in November, Michael Saunders and Jonathan Haskel already voted to cut UK interest rates.

So if Mr. Carney, Ms. Tenreyro and Mr. Vlieghe follow suit, this would make it five members of the nine-person BoE’s Monetary Policy Committee who intend to cut interest rates. In turn, this possibility has weakened sterling.

UK Economy Could Accelerate in Early 2020, Might Affect Sterling

However, it’s worth noting that, if the UK economy picks up in the meantime, the BoE might refrain from cutting interest rates.

For example, although we learnt yesterday that UK GDP fell by 0.3% in November, according to the Office for National Statistics, in the three months to November it rose by 0.1%. This was above economists’ predictions for a 0.1% fall.

Similarly, Deloitte’s CFO Survey for Q4 2019, between October and December, recently revealed "an unprecedented rise in business sentiment", following the UK election result. This suggests that the UK economy may soon grow faster.

For example, Stephen Gallo at BMO Capital Markets says that "weak economic data from the UK are 'old news' and we are in a 'new world'". So if UK GDP grows faster and the BoE stays its hand, this may affect the pound.

UK Inflation for December Forecast at 1.5%, Could Impact Pound

Looking to tomorrow, we’ll learn the UK’s inflation figures for last month. These are forecast at 1.5%, still below the BoE’s official target of 2.0%.

A result below 1.5% might further encourage the central bank to ease UK monetary policy, although a figure above 1.5% could prompt the BoE to pause for now. We’ll learn the result at 09.30 GMT, which might impact sterling too.

Get A Free Exchange Rate Quote

Get a free exchange rate quote to get a competitive exchange rate, and find out how much you could save with Pure FX.

You’ll get a competitive exchange rate for your money transfer.

Please bear in mind, this article is Pure FX’s opinion only and does not constitute advice. Moreover, the exchange rates referred to in this article are the interbank rates, which are the rates at which banks and financial institutions buy and sell currency to each other. Therefore these exchange rates cannot be accessed by individuals or SMEs, and are not the same rates that Pure FX can offer. To get a free exchange rate quote, call us on +44 (0) 1494 671800, or Contact Us.

Get a Quote
Feefo service

What Our Clients Say

Read all the reviews at Feefo.com

Why Us

Exceptional Service

We have received Feefo's Gold Trusted Service Award 3 years in a row.

Same Day Transfers

We can transfer your money to your destination bank account the same day you send it, once we’ve confirmed the payment details with you.

Competitive Exchange Rates

Competitive exchange rates and transparent transfer fees, so you know exactly what you’re paying for.

Dedicated Personal Service

To guide you through the transfer process and keep you up-to-date with the changing exchange rates.

Established in 2006

Since then, we’ve transferred money for thousands of satisfied clients.

How It Works

  • 1. Register

    for a no obligation account
  • 2. Agree the exchange rate

    with your account manager over the phone
  • 3. Send us payment

    for the transfer of your purchased currency
  • 4. We transfer the currency

    to your nominated account