Pound to Euro exchange rate: Sterling continues ‘poor run’ but could rally later this week
Sterling had a volatile week last week, dropping on Friday after new figures reported the UK trade deficit had increased. The fall in the pound to euro exchange rate was attributed to the trade deficit and a drop in export sales. This week looks set to bring more ups and downs for British currency as UK inflation data is released tomorrow. Labour market data will follow on Wednesday, with information showing wage growth and unemployment showing the current state of UK finances.
Tomorrow's UK inflation data is liable to cause significant pound movement Laura Parsons, TorFX currency analyst
Explaining the effects the week ahead could have on the pound, TorFX currency analyst Laura Parsons said: “With no upbeat news to lift the pound, the British currency's poor run against the euro continued last week, with GBP/EUR dropping to within touching distance of seven-year lows. “Tomorrow's UK inflation data is liable to cause significant pound movement. “Slowing inflation would weigh on BoE rate hike expectations and reduce demand for Sterling, but higher CPI would be pound-positive.” City economists are forecasting that the CPI rose at an annual rate of 2.7 per cent in July, up from 2.6 per cent in June.
Getty Images Pound to Euro exchange rate: The pound continued its 'poor run' from last week
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Data released last week from the Office for National Statistics did not help the pound, instead contributing to a drop in Sterling. The ONS reported the UK’s trade deficit has widened by £2bn to £4.6bn which is the biggest gap in figures since September. Goods exports fell to just 4.9 per cent in June, the largest drop in a year, whilst imports were up 1.5 per cent. The trade balance was £12.72 billion, despite being previously suggested to be nearer to £11 billion by analysts.
XE.com Pound to Euro exchange rate: Markets opened with the pound at 1.100