What is currently happening with sterling and the euro in particular?
Whilst an interest rate cut last week by the Bank of England had been widely anticipated, the 0.5% reduction was less than some expected. This enabled Sterling to produce its biggest weekly gain against the Euro in the single currency’s ten-year history. The Euro came under heavy selling pressure as expectations increased that the European Central Bank (ECB) could cut interest rates this week (Thursday 15 th January). Inflation fell to an annual rate of 1.6%, significantly below the ECB’s target of ‘close to but below 2.0%’ and its lowest level in more than two years. As for growth prospects, the risks of a prolonged recession appear to be increasing, as evidenced by a drop in Eurozone service sector activity to a new low since the Euro’s inception. German factory orders, a measure of manufacturing conditions in the Eurozone’s largest economy, also sank by 6% in November. An unexpected rise in retail sales, confirmed on Friday, failed to significantly stem the Euro’s decline. The GBP/E
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- What is currently happening with sterling and the euro in particular?
