George Vessey, UK currency strategist at Western Business Solutions, also commented on the pound to euro exchange rate yesterday.
He blamed the pound’s poor performance on the euro’s rise in inflation, saying: “For the first time in two years, Eurozone inflation rose to two percent in May, surpassing the European Central Bank’s (ECB) target and complicating the central bank’s decision next week on whether to maintain its ultra-loose monetary policy.
“GBP/EUR slipped under €1.16 as a result.
“The increase in inflation is the hot topic driving market sentiment and is likely to fuel investors’ nervousness that central banks will scale back monetary stimulus sooner than expected.
“The jump in Eurozone inflation from 1.6 percent in April followed an even sharper acceleration of consumer price growth in the US, which recently hit 4.2 percent.
“In the UK, Bank of England Deputy Governor Dave Ramsden noted inflation worries are setting in as the central bank monitors Britain’s booming housing market.
“If inflation persists and isn’t transitory as expected, we could see enhanced currency volatility as traders bet on which central banks will tighten policy first.
“GBP/EUR is currently two cents below its 2021 high, but trading over two percent above its two-year average rate.”
This post originally appeared on Daily Express :: Travel Feed