Pound Euro Exchange Rate Subdued as BoE Cut Rates

November 10, 2024 - Written by Tim Boyer

STORY LINK Pound Euro Exchange Rate Subdued as BoE Cut Rates

The Pound Euro (GBP/EUR) exchange rate traded largely flat on Thursday following the Bank of England’s latest interest rate decision.

The Pound (GBP) saw a varied trading day on Thursday following the Bank of England's (BoE) latest interest rate decision. It lost ground against higher-risk currencies but gained against most others whilst seeing little change against the Euro (EUR).

The BoE cut interest rates from 5% to 4.75%, a move widely expected and supported by 8 of 9 Monetary Policy Committee (MPC) members.

Despite this, GBP maintained its position, bolstered by the BoE's forward guidance that stressed a gradual approach to future policy easing.

In its minutes, the BoE stated:

'Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.'

This guidance, combined with a risk-on market mood, helped the increasingly risk-sensitive Pound avoid any substantial losses on Thursday.

The Euro struggled against most of its counterparts on Thursday, weighed down by several factors.

In the aftermath of Donald Trump's Presidential win on Wednesday, the Euro took a nosedive as worries over potential tariffs on European exports shook the currency.

On Thursday, the Euro remained under pressure, burdened by these anxieties and the latest trade balance data from Germany, which underscored the ongoing fragility of the country's industrial and exports sector.

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TAGS: Pound Euro Forecasts