The pound to euro exchange fell towards the European currency today, Monday 14 May.
Pound sterling converted to €1.1332, according to figures accurate at 7:15am this morning.
This is even less than ahead of the weekend, when the pound had dropped to €1.134.
This followed a mid-week high for the sterling currency of €1.1424 last Wednesday.
So what caused it to drop? The weakened pound coincides with a Bank of England interest rate decision last Friday – said to be influenced by Brexit.
TorFX currency analyst Laura Parsons commented today on the pound’s position.
She said: “After sliding last week on the back of the Bank of England’s (BoE) decision to cut growth forecasts for 2018, the GBP/EUR exchange rate remains trading in the region of €1.133.
“While this week’s UK employment figures might provide Sterling with some cause for cheer, GBP/EUR movement will otherwise be dictated by a run of news from the Eurozone, including today’s speeches from various Eurozone officials.
“Any dovish remarks from the ECB could weigh on the euro and give the pound the chance to recoup last week’s losses.”
The Bank of England put an interest rate hike on hold after the Monetary Policy Committee (MPC) voted 7-2 to leave rates as they are this month.
This means they will remain at 0.5 per cent for the month of May. Interest rates were increased from 0.25 to 0.5 per cent in November last year for the first time in over a decade.
In a speech made last Friday, Bank of England governor Mark Carney stressed that a rate rise could still be expected this year.
However, he said the Bank of England would opt for “caution” at present amid economic data.
Faced with weaker economic data in the first quarter of 2018, the Bank of England’s Monetary Policy Committee decided to opt for caution and to leave interest rates unchanged at 0.5% today. While the decision had been largely anticipated, it marks a significant shift from expectations only a few weeks ago for a rate rise in May.
Later in his speech, he blamed “Brexit uncertainty” for the lack of interest rate hike this month.
“While the storms of February and March have given way to sunnier skies, the economic outlook for the UK remains clouded by Brexit uncertainties.
“Despite the welcome agreement on a transition period, the terms on which the UK will trade with the EU beyond that period remain to be determined.”
Last Friday, Laura Parsons commented on the shift of the pound.
She told Express.co.uk: “If policymakers completely backtrack on plans for a near-term rate hike GBP/EUR could tumble.
“However, a neutral statement or indications that borrowing costs could still rise this year would be pound supportive.”
