After a few weeks of campaigning Boris Johnson was yesterday finally announced as the new Prime Minister of the UK. The pound yesterday made some small gains vs the euro.
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However, the gains for the pound vs the euro were limited during yesterday afternoon after an announcement made by the European Commission.
Eurozone consumer confidence is expected to improve during July after a flash estimate suggested that figures improved from -7.2 to -6.6. The euro rebounded quickly against the US dollar and stopped the pound from rising much further.
Consumers appear to be happy with low inflation, improving wages and a fall in unemployment. This could means they have more money to spend and are therefore happy with the situation hence the positive data yesterday.
Tomorrow afternoon we will see the latest interest rate decision by the European Central Bank. Speculation has increased that the central bank could potentially consider an interest rate cut as well as further Quantitative Easing.
ECB President Mario Draghi is concerned by low inflation and a fresh round of easing could help to improve this issue. Since 2015, the ECB has used up to €2trillion worth of public sector bonds so clearly there is an appetite for using this form of easing.
The expectation is for further changes in September so if we do have any surprise announcements this could potentially send GBP/EUR exchange rates in an upwards direction.
Therefore, if you’re in the process of buying or selling euros then you may wish to pay close attention to the press conference on Thursday afternoon.
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