UK and Eurozone Interest Rates – GBP EUR Exchange Rates

At midday today the Bank of England are set to announce their latest interest rate decision and considering last month we heard that two of their members voted for an interest rate hike there is a very outside chance that we could see interest rates go up. A change this month is unlikely and most analysts remain under the impression that despite growing support for a rate hike the Bank will wait at least a few more months before they make any changes. Regardless of this the very fact there is an outside chance of a rate hike means clients that are looking to transfer funds internationally should be aware of the announcement and speak with one of our senior currency brokers before the decision to discuss the options available to you.

In the meantime it could be that the European Central Bank (ECB) takes centre stage as several analysts are predicting a new move from the ECB which could either beĀ  further cut in interest rates from the current record low level of 0.15% to 0.05% or potentially even the introduction of Quantitiative Easing (QE). Either way Mario Draghi, Head of the ECB, will follow up the announcement with a press conference where he will discuss the views of the ECB and the Eurozone economy so what ever happens it is likely to be a volatile day for Euro exchange rates. It would be a bold move to cut interest rates even further and considering that there appears to have been very little impact from the last rate cut in June from the ECB questions will be raised as to the effectiveness of a further interest rate cut. So, the Central Bank may instead look for other options which they could even run alongside another interest rate cut or on its own and at present most focus is on QE. We have seen in the UK the negative initial impact QE can have on a currency as it highlights the weakness of that economy so if it is introduced today we may witness some EUR weakness and therefore some excellent opportunities for those clients looking to buy Euros.

With the announcements due at midday from the Bank of England and 12:45pm from the European Central Bank it is important to make sure that if you need to transfer funds internationally you keep in close contact with us here at Foreign Currency Direct plc so we can discuss the options available to you and the latest developements in the currency market. You can call straight through to our experienced trading team here at Foreign Currency Direct plc on 0800 328 5884 or if calling from abroad on 0044 1494 725353 alternatively email me on