Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Euro Rate Forecast (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

EURGBP Tumbles After BoE Rate Announcement

% of readers think this story is Fact. Add your two cents.


The EURGBP exchange rate slumped after the Bank of England interest rate announcement on Thursday to levels not seen since May 2020. The bank held interest rates steady and refused to announce any further stimulus plans. The bank also saw a healthy bounce in the economy after the first quarter.

EURGBP is trading at 0.8745 and the pair could move lower again to the 0.8685 level which provided support in April 2020.

BoE warns of negative rates but sees strong recovery

The Bank of England have predicted a strong recovery for the UK economy in the second quarter after an expected slump in Q1. The bank warned that lenders should prepare for negative interest rates in July if the economy sees a further crisis, but the path forward is more hopeful.

Analysts had expected the BoE to hold off on further rate cuts, but the path of stimulus was unclear. The negative rate threat has been removed with the signing of the Brexit agreement and the government’s vaccine programme. The country has already administered 10 million shots and is ahead of many other nations in getting the economy opened.

The ECB has promised ultra-easy policy for years to come, with price pressures muted and a recovery from a pandemic-induced recession dragging out.

The Euro was also boosted by news that the ECB’s former President, Mario Draghi, was handed a mandate to lead the Italian government after the resignation of Giuseppe Conte. The move would ease concerns over the country’s political instability and will please bondholders.

HSBC knocks sterling’s ‘risk-on’ nature

HSBC are less bullish on the pound than some with one of the bank’s analysts questioning the currency’s role a risk indicator.

The analysts said that GBP’s role “as a risk-on currency is not well deserved and they see sterling underperforming the G-10 currencies in 2021. This analysis seems to underestimate the country’s movement in vaccines. If the UK has already given 20% of the country a first does in the vulnerable age groups, they would be on track to provide the second dose to those groups in March. This would see the country able to deploy a strategy to open up the economy more quickly than many of those G-10 countries.

The “risk-on” element that HSBC are missing is the undervaluation in the pound created by the Brexit risk premium. Following the signing of the Brexit deal in December, the currency saw no follow-through due to the latest strict lockdowns.

If the UK economy opens up more quickly than its European peers, it will outperform the Brexit gloom scenarios and that could see the EURGBP back near the pre-referendum levels of 0.7400.

The two countries have gone down the same monetary policy path since then and the European situation is harder to control in terms of vaccine logistics and debt markets.

The post EURGBP Tumbles After BoE Rate Announcement appeared first on Euro Rate Forecast.



Source: https://www.eurorateforecast.com/2021/02/eurgbp-tumbles-after-boe-rate-announcement/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.

Report abuse
Loading...

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.