Best Pound to Euro Money Transfers Since January 2013

The Pound Euro exchange rate reached 1.19 GBP/EUR yesterday, meaning the best pound to euro money transfers since 20 January 2013 as the markets continue to bet that the Bank of England will have to increase interest rates sooner than the 2016 date currently anticipated by new Governor Mark Carney when he presented his ‘forward guidance’ policy last month.

Yesterday, in testimony to Parliament’s Treasury Select Committee, Carney said that the Bank was ready to act if the UK's fledgling recovery failed to materialize. He also recommended limiting how much homeowners could borrow should the UK housing market overheat and that the Bank could increase monetary stimulus if the pickup in business confidence and employment faltered. The markets’ reaction was muted as we await next week’s minutes of the monthly policy meeting for clues as to the direction of future policy.

Against the US dollar, the pound remains at its highest level since 1 February before falling back slightly as the markets await next week’s policy decision from the Federal Reserve.

The big move for the pound yesterday was against the Australian dollar where the pound regained some of the heavy losses of the last three days following the release of the latest employment data in Australia overnight which disappointed the markets. The data showed the first back-to-back jobs decline in more than two years, underscoring the challenge facing Prime Minister-elect Tony Abbott in boosting the economy. Australian unemployment now stands at a four-year high rate of 5.8%.

In New Zealand, the Reserve Bank of New Zealand kept its benchmark interest rate unchanged at 2.5% following its latest policy meeting but was more explicit than other central banks as to when it will likely increase interest rates saying that its key interest rate will likely be raised next year. It cited rapid house price inflation in some areas and an increase to its GDP forecast.