BoE negative interest rate hint halts Pound recovery TORFX Weekly exchange rate news:

Read our round up of the latest exchange rate news and plan your currency transfers for the right time.

Last week’s rates

  Weekly Highs Weekly Lows

GBP/EUR  €1.1007  €1.0781

GBP/USD  $1.3002  $1.2766

EUR/GBP  £0.9275  £0.9084

EUR/USD  $1.1898  $1.1746

The GBP/EUR exchange rate steadily rose through this week, before the Bank of England’s (BoE) interest rate decision halted the Pound’s gains.

What drove exchange rates last week?

The Pound to Euro exchange rate recovered through this week after starting on the back foot following the controversial Brexit Internal Market Bill clearing its first hurdle in Commons.

However, the Pound mounted a bullish run as these Brexit concerns faded due to growing opposition to the Internal Markets Bill and likelihood of amendments.

This run was cut short later in the week following the BoE’s interest rate decision. While the latest policy decision remained unchanged, the BoE strongly hinted that negative interest rates could be an option, weighing on Pound exchange rates.

Meanwhile, the Euro rose on Monday following the release of the Eurozone’s Industrial Production figure for July, which beat forecasts, rising to 4.1%.

EUR received another boost on Tuesday after the release of Germany’s ZEW Survey of Economic Sentiment for September, which showed economic optimism surprisingly jumped higher.

However, the Euro’s (EUR) gains against Sterling fluctuated, and ended the week lacking direction as fears grew over Europe’s coronavirus situation.

As cases surge in Europe to 300,000 in the last week, prompting the WHO to warn of a ‘very serious situation’, EUR traders are becoming more cautious as the return of lockdown restrictions loom.

At the same time, the US Dollar has fluctuated after the Federal Reserve’s latest policy statement outlined interest rates would stay near zero until 2023, and hinted that the US government should provide additional stimulus.

What could move exchange rates this week?

Looking ahead to next week, the Pound will continue being driven by Brexit developments and the Internal Markets Bill. Any further signs of souring UK-EU relations as talks resume would drag down Sterling.

Meanwhile, Euro traders will look for insight into Germany’s economic recovery in Monday’s release of the German GfK Consumer Confidence Survey for October.

Added to this, investors will look to Wednesday’s releases of the UK and Eurozone manufacturing and services PMIs, which will show whether business activity recovered further in September, driving movement in the Pound and Euro.

In the US, the focus for US Dollar investors will likely turn to Washington, with hopes that Congress will finally reach an agreement on the next round of fiscal stimulus to boost the economy.