Pound to euro exchange rate: Sterling GAINS amid inflation rate woes
The pound is currently trading against the euro at €1.139, having reached highs of €1.14 earlier today.
It follows on from a tumultuous week following the Office for National Statistics (ONS) figures showing a drop in employment as well as a stagnating wage growth.
This has meant that wages are still struggling to increase with inflation rates, causing households to feel a pinch.
Last week the pound hit a six-month high following Prime Minister Theresa May’s positive Brexit negotiations after months of uncertainty. Her defeat by Parliament earlier this week could hinder the next stage in Brexit negotiations.
It is now thought that inflation rates will struggle to reach normal levels of two per cent before 2020.
The inflation rates have reached highs of 3.1 per cent, the highest in nearly six years.
Figures over three per cent require Bank of England’s (BoE) Mark Carney to write to Philip Hammond explaining the rates.
The interest rate was then raised to 0.5 per cent, from 0.25 per cent, the first time in more than a decade.
Todays EU summit could impact the pound if Brexit talks are able to progress with trade talks.
Theresa May has headed to Brussels to discuss the trade negotiations after the UK leaves the EU, just hours after losing to Parliament regarding Brexit agreements.
It has meant that UK Parliament must have a vote on the final Brexit deal before the country leaves the EU.
This will now mean May heads to the EU summit in a somewhat weaker position as she meets with the 27 leaders.
Laura Parsons, currency analyst at TorFX commented: “With both the Bank of England (BoE) and European Central Bank (ECB) delivering interest rate decisions, we were braced for notable currency movement on Thursday.
“As it happened, the announcements had disappointingly little impact.
“The BoE’s unchanged rate outlook left Sterling stuttering, but GBP/EUR did manage to climb by half a cent as the ECB suggested that inflation in the Eurozone is unlikely to reach the bank’s 2 per cent target until after 2020.
“GBP/EUR briefly hit €1.14 and the pairing could extend gains before the weekend if today’s EU summit formally signals that Brexit negotiations can move on to trade talks.”