The post EUR/GBP continues breaking lower after BoE leaves interest rate unchanged appeared on BitcoinEthereumNews.com.

EUR/GBP declines following the BoE’s decision to keep interest rates unchanged.  There had been speculation it might cut rates which would have weakened the Pound.  The Euro retains support after hawkish commentary and data showing an increase in the Current Account surplus.  EUR/GBP is trading lower in the 0.8390s on Thursday, as it extends its breakdown from the shallow channel it had been edging higher within since the end of August.  The pair is trading a quarter of a percent lower on the day as the Pound Sterling (GBP) strengthens versus the Euro (EUR). The Pound is appreciating across the board after the Bank of England (BoE) voted by a majority of eight to one to keep interest rates unchanged at 5.00%. Only one member voted for a 0.25% cut. Sterling is seen gaining because relatively higher interest rates attract foreign investors, resulting in higher inflows of capital.  The BoE also announced it would be reducing its stock of gilts (UK government bonds) by 100 billion GBP between October 2024 and September 2025. This suggests it will not be buying gilts to replenish its existing stock when they mature. This, in turn, is likely to lead to a fall in gilt prices but a rise in gilt yields. Higher yields tend to support the Pound, but weigh on EUR/GBP. The Euro, meanwhile, is also finding support due to hawkish commentary from European Central Bank (ECB) executive board member Isabel Schnabel, who said that “sticky services inflation is keeping headline inflation at an elevated level.” Her comments suggest the ECB will not cut interest rates aggressively since inflation remains high. However, she also added that “medium-term inflation projections often clustered around the 2% target,” and that “wage growth is expected to slow down as past price shocks unwind.”  Schnabel’s comments diverge…

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Filed under: News - @ September 19, 2024 1:28 pm