Pound euro exchange rate: GBP/EUR steadies as BoE says banks are ‘prepared’ for Brexit

The central bank stated that the UK financial system was “prepared for Brexit and the trade wall fall-out.” However, Governor of the BoE Mark Carney warned that despite “extensive and expensive” preparations, crashing out of the EU with a no-deal would come as a “major economic shock” to the UK. The euro, meanwhile, was able to benefit from USD weakness thanks to yesterday’s dovish comments from the US Federal Reserve, which seemed to hint at the possibility of a rate cut by the end of this month.

Yesterday also saw publication of the European Central Bank’s (ECB) monetary policy meeting minutes, which indicated concerns for the Eurozone’s economy amid increasing global economic uncertainty.

The ECB minutes supported the odds of the central bank cutting interest rates or instating quantitative easing in the near term and weighed on EUR. 

Meanwhile, German wholesale price index figures for June fell short this morning, coming in at -0.5 percent.

This left some euro traders concerned about inflationary pressures in the near-term. 

The pound was unmoved by today’s speech from Gertjan Vlieghe, a member of the BoE’s Monetary Policy Committee, delivered a speech in which he warned that a no-deal Brexit could mean near-zero interest rates. 

Mr Vlieghe sounded dovish about the months ahead, saying: “It is entirely possible that we see data volatility again around the perceived no-deal risk at the end of October.”

He added: “It is highly uncertain when I would want to reverse these interest rate cuts.”

The GBP/EUR exchange rate may edge lower before the weekend following the Eurozone’s industrial production figures for May, which are expected to show improvement. 

source: express.co.uk