Interest Rate Decisions for UK and EU – GBP EUR Exchange Rates

Today at 12:00 and 12:45pm we have the UK and the EU interest rate decisions due. Historically these decisions have had a big impact on the currency markets as they can give an insight into how the Central banks see the currency markets. While it is unlikely that we will see any change in interest rates for the UK there is a possibility that we will see more Quantitative Easing (QE) and as regular readers of this currency blog will be aware, the mere mention of QE can lead to Sterling weakness so if they do announce another £25bn in QE today we could see the Pound fall. In Europe there is the outside chance of an interest rate change but like so many of the other economic data releases it is incredibly difficult to second guess what will happen. However, what we can be sure of is that any change in interest rates could lead to EUR exchange rate movement. Keep in touch with our experienced currency brokers who will be happy to keep you informed of all the latest news regarding the interest rate decisions and the subsequent exchange rate movement.

 UK Growth Forecast Cut

The British Chambers of Commerce (BCC) has cut their forecasted growth level for the UK from the previously predicted 1% growth for 2013 to 0.6% following the continuing challenging economic conditions. This news comes just before the Bank of England make their latest decision on interest rates and possibly more importantly for QE. However, the BCC has warned against further QE stating that further monetary stimulus would be “unnecessary and unduly risky”, whether the BoE listen to the BCC is another matter though and I would not be surprised to see another £25bn worth of QE announced today. This negative news from the BCC coupled with more QE could mean we are in for a rocky day for GBP exchange rates.

Further Job Losses In The UK

Another large high street name has announced it is making further redundancies with Thomas Cook announcing that they are cutting 2,500 jobs and are closing around 200 stores. Thomas Cook has struggled in what it called a “difficult trading environment” and it is unlikely that this environment will change anytime soon. This cut is about 16% of its workforce and just goes to highlight how challenging the currency economic situation is. Recently we have seen a number of large UK companies go into administration and it appears that this trend is likely  to continue. As more companies struggle the chances of the UK economy recovering reduces and therefore the pressure on Sterling increases. So, with news like this from Thomas Cook the chance of Sterling recovering against the major currencies seems slight.

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