The Pound Sterling exchange rate recovered well towards the end of the week against the Euro (GBP/EUR) and Indian Rupee (GBP/INR) on the back of Brexit hopes that a divorce deal could soon be on the table.
Eurozone unemployment hit a near nine-year low at 8.8% in Thursday’s European session and still, the Pound remained around 0.50% higher against the Single Currency.
The Pound exchange rate sits at a two-month high versus the US Dollar (GBP/USD) as it looks more likely that the UK could soon move on to trade talks and be saved from a disorderly Brexit in 2019.
Earlier in the week, the Pound Sterling exchange rate fell against the Euro (GBP/EUR) and Indian Rupee (GBP/INR) in following the release of the Bank of England (BoE) banking stress test and followup press conference.
In the UK, the twice a year Financial Stability Review showed that the nation’s biggest lenders were ‘resilient’ to a downturn which include the increase of interest rates to 4.0%, a 27.0% fall in Sterling, and recessions on a both a global and domestic scale.
Bank of England Governor Mark Carney said:
‘Despite the severity of the tests, for the first time since the Bank began stress testing in 2014, no bank needs to strengthen its capital position as a result.’
Additionally, the central bank concluded that Britain’s banks would be able to cope with a disorderly Brexit. However, Carney was clear to say that although they could cope, they’d be susceptible to other shocks at the same time and a disorderly Brexit would create a fall in the Pound exchange rate and a weaker UK economy.
‘This [a disorderly Brexit] is not a good scenario… It is one we are all working to avoid as it has some quite material economic costs, even if the financial system continues to operate through it.’
Markets Eye German Consumer Confidence amid Election Fallout
Meanwhile, Eurozone household lending increased by 2.7% on the year in October, the same as September and slightly under the 2.8% forecast. Despite this, the increase in household lending remains the steepest incline since 2009. Markets are awaiting the German GfK Consumer Confidence figure due out at 12:00pm to see how sentiment is olding up amid election uncertainity.
The Indian Rupee recently achieved a two-month high against the US Dollar (INR/USD) with a high of 64.50 as it tracked gains of other Asian currencies. The Rupee has also spent Tuesday strengthening against the Pound (INR/GBP).
Today’s Interbank Exchange Rates
The Pound to Indian Rupee (GBP/INR) exchange rate is trending at 85.6880. The Pound to Euro (GBP/EUR) exchange rate is trading at 1.1188.