Sterling Euro exchange rates have hit their lowest levels since the
start of September yesterday as the Bank of England signalled that we
could see a further interest rate cut at the next meeting due to take
place in November.
Earlier this week UK inflation showed a fall from the expectation of
0.7% down to 0.6% and this is clearly a concern for the central bank.
We have seen a mixed amount of UK economic data during the last
fortnight but with inflation falling in order to combat the fall a
central bank will often look at cutting interest rates and this look to
be getting priced in which is part of the fall this week for Sterling vs
Bank of England governor Mark Carney has recently said that the Brexit vote was the ‘toughest day’ in his job.
The BoE has come out well since the Brexit as they clearly steered
the economy through a very difficult period but the economy is still
under a lot of pressure since the vote to leave the European Union.
One of the big events due out next week will come on Wednesday when
the US Federal Reserve are due to meet. The US economy has been
performing extremely well during 2016 and there is a chance that
interest rates may go up when the Fed meeting takes place.
This is likely to have a big impact on GBPEUR rates as Dollar strength often results in Euro weakness and vice versa.