Pound to Euro Exchange Rate Forecast - GBP/EUR Rate Predictions & Euro Outlook This Week

August 31, 2014 - Written by John Cameron

STORY LINK Pound to Euro Exchange Rate Forecast - GBP/EUR Rate Predictions & Euro Outlook This Week

Currency News UK brings you the Pound to Euro exchange rate predictions and outlook - Currency analysts forecast the GBP/EUR pair to be major forex mover in September 2014's foreign exchange markets.

September gets under way with a slew of key themes promising to provoke considerable price action for the world’s leading currency pairs.

Analysts forecast that the major mover on the weekly session may be the Pound to euro exchange rate which finished last week’s session at 1.2639.

Can the GBP to EUR surpass the best exchange rate levels seen back in July 2014?

Let's take a quick look at the FX markets as they open for trading (31/08/2014 22:45 GMT):

- The pound to euro exchange rate is -0.02 per cent lower at 1.26365.
- The pound to dollar exchange rate is -0.03 per cent lower at 1.65923.
- The euro to australian dollar exchange rate is +0.14 per cent higher at 1.40811.
- The euro to pound exchange rate is +0.02 per cent higher at 0.79136.
- The euro to dollar exchange rate is -0.01 per cent lower at 1.31305.

Why is Sterling predicted to move against the US Dollar and Euro currencies this week?

The main risk event of note over the next 7 days promises to be Thursday’s European Central Bank (ECB) policy announcement.

Last Friday’s whole of eurozone inflation figures are open to a dual interpretation; on the one hand the key regional price rise figures pointed to an increase in the deceleration of price rises in mainland Europe from last month’s 0.4% to 0.3% this month.

However, the closely-monitored Consumer Price Index numbers from Eurostat additionally revealed that the core year-on-year measure of price rises in the euroland had increased slightly from July’s 0.8%.

The news that there had been a marginal increase in price rises for goods and services considered by Eurostat to be of central importance to the eurozone’s economic participants gives ECB President Mario Draghi increased wriggle room during his post-announcement press conference on Thursday.

Analysts will be closely monitoring the ECB Chief’s words following his comments of ten days ago in Jackson Hole.

Draghi used the economic symposium to observe that, ‘the way back to higher employment is a policy mix that combines monetary, fiscal and structural measures at the union level and at the national level’. Draghi’s comments sounded strikingly similar to Japanese Premier Shinzo Abe’s ‘three arrows’ policy, leading many economists to surmise that Quantitative Easing is now a formality for the eurozone.

Jennifer McKeown of Capital Economics doesn’t fully agree, stating on Friday that, ‘there is plenty of ammunition for the doves on the ECB’s governing council to argue for more policy support.

While the bank is unlikely to act next week, it is likely to firmly hint that Quantitative Easing is firmly on the table.’ Any such commentary from Draghi will almost certainly send the Pound euro exchange rate higher from last week’s close of 1.2639 towards its multi-year high of 1.2897 GBP/EUR.

Wednesday’s eurozone Gross Domestic Product numbers for Q2 could be defining – a print of below the lowly Q1 counterpart number of 0.7% then the near-term future of the single currency may be sealed.

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