Pound euro exchange rate slips again, even poor German industrial figures can't support this pair

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Published on Wednesday, 08 August 2012 09:10

Written by Will Peters

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Sterling is being hampered by a pervasive sense that the Bank of England will hint at yet further monetary easing measures today.

The pound to euro is 0.08 pct down on Tuesday night's close at 1.2591. This euro strength comes even after it was shown that German exports slowed by 1.5 pct in June - analysts expected a 1.3 pct fall.

The pound to dollar is 0.2 pct down at 1.5590.

Sterling is being hampered by a pervasive sense that the Bank of England will hint at yet further monetary easing measures when it gives its quarterly inflation report this morning.


The measures will be in response to the continued weak performance being put in by the economy; until we get some good figures the pound euro pairing, and indeed many other pound crosses, will fail to gather steam.

"The BoE’s Inflation Report is likely to see expectations for UK growth in the second half of the year downgraded, though a bounce of some sort will still be anticipated. We do however expect the BoE to remain in wait and see mode, despite weak growth," says Richard Driver at Caxton FX.

Turning to GBP-USD we note that the US Fed’s Bernanke remains extremely cautious despite some signs of US economic recovery.

A member of the US Federal Reserve stoked hopes of QE3 with comments indicating that the US economic outlook calls for another QE program.

However, a full range of opinions are still in circulation within the Fed, with a hawkish member arguing against QE3 and questioning its likely effectiveness yesterday, while Bernanke gave few clues away.

"We maintain a bearish outlook for this pair, which trades below $1.56 this morning," says Driver.