Pound volatile on Brexit uncertainty
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Pound volatile on Brexit uncertainty, ECB speculation bolsters euro
Trade in the pound was mixed during last week’s session as some upbeat UK economic data was met by growing Brexit uncertainty.
Sterling continues to struggle this week as well, with GBP/EUR tumbling to €1.1367 and GBP/USD sliding to US$1.3406.
Looking ahead, the Federal Reserve and European Central Bank will separately meet later this week, with both banks looking set to have a considerable impact on currency markets.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
EUR surges as ECB hints at QE wind down
The euro surged last week, lifted higher by a mix of US dollar weakness and hawkish comments from the European Central Bank (ECB).
The euro’s initial gains last week were largely driven by weakened demand for the US dollar, with markets flocking to the single currency as the recent dollar rally appeared to run out of steam.
The EUR exchange rate faced a small setback in the form of some lacklustre Eurozone retail sales figures on Tuesday, although this proved to be little more than a blip on the radar as the euro surged in the second half of the week.
This upswing in the euro was almost entirely driven by a speech by ECB chief economist, Peter Praet, in which he suggested policymakers would begin to discuss the timetable for exiting its generous quantitative easing programme at its next policy meeting.
The news proved to be a shot in the arm for the single currency as the remarks prompted frenzied speculation over the possibility the ECB could taper its bond purchases by the end of the year, opening the way for a potential rate hike as soon as next year.
This week will undoubtedly see EUR investors focus on what looks to be an eventful policy meeting from the ECB on Thursday, with the euro poised to skyrocket if the bank announces plans to wind down its stimulus by the end of the year[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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* Information courtesy of Currencies Direct, Philip McHugh
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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