by Sam Hewitt
The British pound has jumped +0.41% versus the euro today to reach 1.3097, its strongest since March 7th 2008, or 7 years.
Sterling continues to climb, because the Swiss National Bank unexpectedly ended its peg to the euro yesterday, while Eurozone inflation has been confirmed at a 6-year low.
Sterling rises, as SNB stops buying vast amounts of euros
The pound has risen, chiefly because the Swiss National Bank shockingly ended its minimum exchange rate peg of 1.20 to the euro yesterday.
This lifted sterling, because previously the SNB was buying enormous quantities of euros to prevent the Swiss franc from strengthening too much.
Hence, sterling has risen versus the euro, because one of the biggest buyers of euros in the world is no longer supporting the common currency.
"The euro can’t find a friend for love nor money," says economist Kit Juckes at Societe Generale SA, for instance.
Euro may weaken further, as Eurozone inflation confirmed at -0.2%
Moreover, sterling may exceed its 7-year high versus the euro, because it's been confirmed today that the Eurozone entered deflation in December.
Prices fell -0.2% in the common currency bloc last month, the 1st annual decline since 2009.
This boosted the pound versus the euro, because it greatly raises the odds that the European Central Bank will soon engage in emergency monetary stimulus to lift Europe's inflation rate.
"The central tendency will be for a weaker euro -- what’s to stop it?" says economist Greg Peters, Prudential Financial Inc.
