Pound/Euro rates have staged a recovery today. Initially we saw the pair drop through the morning to as low as €1.13, however just before midday it started rising, and has now levelled off at €1.14 as the chart below illustrates:
Why did the Pound/Euro rate rise to €1.14?
Interest Rates. Yesterday we saw the rate drop when the Bank of England governor Mark Carney said that now was not the time to raise interest rates, and this weakened the Pound and the GBP/EUR rate dropped. Today however, the Bank of England’s Chief Economist Andy Haldane said in a speech that he would back a rise in interest rates later this year. This helped the Pound gain as investors purchased Sterling in the hope of a better return should rates indeed rise.
It’s a welcome gain and a reversal of the drop we saw tomorrow, and GBP/EUR is now back at the level it has seemed comfortable in of late at around the €1.14 mark.
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