GBP/EUR: Pound Steadies After Heavy Fall vs. Euro As May Vows To Stay
  • Pound (GBP) rises after falling last week
  • BoE rose interest rates after a more hawkish than expected vote
  • Euro (EUR) eases after  cautious comments from Christine Lagarde
  • No major data releases from the eurozone expected

The Pound Euro (GBP/EUR) exchange rate is ticking a few pips higher, adding to gains in the previous session. The pound rose 0.10% on Monday, settling at €1.1827 after rising as high as €1.1853 earlier in the session. At 05:45 UTC, GBP/EUR trades +0.06% at €1.1834.

The pound pushed higher at the start of the week, recouping some of the losses from the previous week. The pound fell last week versus the euro despite the Bank of England raising interest rates to 0.5% and despite 4 policy makers actually wanting to raise interest rates to 0.75%, in a more hawkish than expected BoE monetary policy meeting.

In the absence of any data on Monday, the pound lacked any real catalyst to drive more gains. Today the economic calendar is quiet again today so the pound could see another quiet session.

Domestic political uncertainty appears to have eased slightly with Boris Johnson still clinging to power. This means that there have not yet been the 56 letters of no confidence submitted to the 1922 Committee to put the Prime Ministers’ leadership into doubt.

The euro eased lower in the previous session after impressive gains in the previous week. The euro fell despite several ECB policy makers saying that they see the ECB hiking interest rates in the final quarter of the year. These more hawkish comments came following last week’s ECB meeting and the press conference which saw ECB President Christine Lagarde adopt a more hawkish stance.

Christine Lagarde spoke again yesterday but adopted a more cautious tone  saying that any change to monetary policy will be gradual and data dependent. The slight change in tone from last week pulled the euro lower. Consumer prices rose to 5.1% in December, well above the ECB’s 2% goal.

A change to formal guidance could come as soon as next month when the latest economic projections are released.