The pound has fallen to €1.116 against the euro after it emerged interest rates may or may not rise next month. 

Yesterday, the pound rose to €1.123 against the euro following a higher than predicted consumer confidence index. 

Rising from -1.2 to 1.0, it had recovered after three quarters of decreasing.

Laura Parsons, currency analyst at TorFX said: “Bets that the Bank of England (BoE) will increase interest rates in November fell on Tuesday, and the GBP/EUR exchange rate fell along with them. The pound lost around -0.7 per cent to trade in the region of €1.114 after BoE Deputy Governor Jon Cunliffe indicated that the question of whether or not rates will rise is still an open one. 

Pound euro exchange rate

Pound to euro exchange rate: Sterling has fallen after interest rate uncertainty

Bets that the Bank of England (BoE) will increase interest rates in November fell on Tuesday, and the GBP/EUR exchange rate fell along with them.

“He noted ‘I am not going to try and anticipate the meeting, but for me the economy has clearly slowed this year’.”

Laura warned the pound euro exchange rate could slide further later today if the UK’s third quarter growth data disappoints expectations. 

She said: “As it stands, output is expected to rise 0.3 per cent on the month and 1.5 per cent on the year. Germany’s IFO measures are also likely to impact the GBP/EUR pairing.”

Catalonia and Spanish tensions have also affected the pound to euro exchange rate, putting the euro under pressure regarding thesis of Catalonian independence. 

Pound euro exchange rate

Pound to euro exchange rate: The pound has fallen to €1.116 against the euro today

It also follows from the Office of National Statistics (ONS) figures on the rise of inflation just last week.

Inflation increases against a slower wage growth have also caused concern with experts, as consumer budgets struggle.

Households are to feel the pinch as inflation levels hit a five-year-high, coming in at three per cent.

It last hit the same levels in April 2012, after reaching 3.5 per cent in March 2012.

With the government’s target of just two per cent, the Bank of England’s interest rates could also increase in another hit to household spending.

Pound to euro exchange rate

Pound to euro exchange rate: “The economy has clearly slowed this year”

As Brexit talks continue, the outcome will affect the pound as May continues to battle for a good relationship after the UK leaves the EU.

The threat of a no-deal Brexit hangs over the proceedings as the prime minister fights for a good outcome.

She stated she has a “degree of confidence” that progress will be made by December to start trade talks, according to the BBC.

With the next EU summit on December 14, it is hoped that enough will have been done to begin the talks of trade deals between them.

However, the 27 EU leaders are reluctant to begin those talks due to not having “sufficient” talks surround the Brexit separation and relationship after.

 

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