The Euro Pound exchange rate rose by 0.3% this morning, with the pairing currently trading around £0.848 as UK markets remain jittery ahead of this afternoon’s Bank of England interest rate decision.The BoE’s decision is on a ‘knife-edge’.
With just one day to go until the UK officially leaves the European Union, odds of a rate cut from the central bank have risen as Britain now faces an uncertain economic future.
However, the post-election economic bounce may dissuade policymakers from adjusting the current 0.75% interest rate, with many companies now unfreezing their investment plans for a post-Brexit economy.
If the BoE does hold its interest rates today, we could see the GBP/EUR exchange rate begin to rise as UK markets breathe a sigh of relief as the UK’s economic outlook stabilises.
Euro (EUR) investors will be looking ahead to tomorrow’s flash release of the Eurozone’s inflation figure for January, which is forecast to hold steady at 0.2% on quarter-to-quarter, while the year-on-year figure is expected to ease from 1.3% to 1.2%.
Tomorrow will also see the release of January’s UK GfK consumer confidence, which is expected to remain subdued at -9.
Brexit will remain firmly in focus tomorrow, with the UK due to officially leave the EU. Any further indications that the UK could fail to secure a comprehensive trade deal with the bloc, however, would weaken the Pound as the UK’s economic future looks uncertain.