Pound euro exchange rate faces a thin day of data, but this week sees the BoE MPC decision

Last Updated on Monday, 06 February 2012 13:29 Written by Will Peters Monday, 06 February 2012 13:27

The pound euro exchange rate is 0.54% higher at 1.2078.

Today, the calendar in the UK is very thin so, the focus will be on the European side of the story and in particular on the Greek debt negotiations.

Uncertainty on this issue is weighing on the euro this morning and EUR/GBP is coming close to the 0.8275 support area.

---

Advertisement - Article Continues Below

---

A morning note on the pound to euro rate from KBC Markets says:

"As long as this issue is not out of the way, then euro will probably remain under pressure short-term.

"A test of the 0.8222 range bottom is possible. 

"Further out this week, there are few data on the agenda before the BoE rate decision except for the UK trade balance and the production data which will be published just a few hours before the announcement of the BoE decision."

So, (currency) traders will have quite some time to think about the outcome of the BoE meeting.

The consensus indicates that the market is in doubt whether the BoE will raise the program of asset purchase by £50 or by £75 bln.

Given the (moderate) improvement in eco data of late a rise by £50bln will be the most logical option.

At least for now, we have the impression that a £50 bln rise in the asset purchase programme might cause no big damage from sterling.