Pound/Euro drops again on Interest Rate uncertainty

As you can see from the chart below, GBP/EUR rates have edged lower throughout today. I pointed out in my last post that despite a slight gain for the Pound, significant downside risks remain, and that has pushed the Pound lower:

Why has the Pound fallen against the Euro?

To understand why the Pound has fallen against the Euro, you first need to look at why it’s risen 5% since last month. This is due to a little more positivity about the Brexit negotiations, and rumours that the Bank of England would be raising interest rates next month. However the case for a November rate hike is now in doubt, with the BoE/s deputy governor today raising doubts about a move, saying that it’s an open question. Markets had been pricing in a rate hike soon, but the latest comments mean it might not happen. Couple this with the continues uncertainty about Brexit, and you have the reasons that Sterling has been unable to hold on to its recent gains.

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