Euro to Pound Exchange Rate Outlook - EUR GBP Mixed Week on Foreign Exchange Rate Markets

September 14, 2014 - Written by James Fuller

STORY LINK Euro to Pound Exchange Rate Outlook - EUR GBP Mixed Week on Foreign Exchange Rate Markets

The Euro to Pound saw losses last week as the Single Currency trades amid difficult economic circumstances. The EUR GBP exchange rate today stands at 0.79931. (revised 16/09/2014 12:00 GMT)

The Euro has been adversely impacted by the poor momentum of the Eurozone’s recovery and the continuing impact of sanctions placed by both the EU and US against Russia. Russia, by way of retaliation, limited trading between themselves and the EU, causing losses for Eurozone businesses. Initial sanctions, which materialised weeks ago and could remain in place for up to three months, caused Russia to respond with import bans on items such as food and dairy. However, Russia is now contemplating further bans on import items such as textiles and automobiles from the EU, which is likely to weigh down the Eurozone recovery further in a time that already sees it floundering.

Euro Exchange Rate Affected by Ongoing Russia and Ukraine Crisis

The continuation in tensions between Russia and Ukraine has affected the Euro exchange rate for some time now. Not only are sanctions taking a toll on Eurozone trading, but now the prospects of gas shortages are causing anxiety. Eurozone nations are stockpiling gas reserves in preparation for a decrease in supplies from the pipeline that runs through Ukraine from Russia. Russia has recently cut off Ukraine’s supply after they claimed a price dispute had taken place. However, not all countries can store enough gas to allow them to progress through the winter without worry. East European Gas Analysis representative Mikhail Korchemkin stated: ‘Only Latvia has enough storage capacity to survive through the winter without Russian gas. Other countries of central and eastern Europe don’t have enough storage capacity.’

As the winter draws closer Ukraine fears for its residents in the cold weather if supplies run out; the nation therefore needs to slash its usage. Head of Naftogaz, the Ukrainian state energy company Mr Kobolev commented: ‘The situation is very difficult. Since we have no choice, no other solution, we’ll find a solution and have to live with the amount of gas we will have.’

Pound Exchange Rate Could be ‘Upset’ in Scottish Referendum Debate

Conversely the Pound has been under debate lately relating to its placement in an independent Scotland after the referendum, which is drawing ever closer. Large topics of debate shroud Sterling in the run up, such as the effect either a ‘Yes’ or a ‘No’ vote will have on the currency. The International Monetary Fund (IMF) however has commented that the referendum as a whole ‘will raise a number of important and complicated issues that will have to be negotiated.’

IMF representative Bill Murray continued: ‘The main immediate effect is likely to be uncertainty over the transition to a potentially new and different monetary, financial and fiscal framework in Scotland. While this uncertainly could lead to negative market reactions in the short term, the longer term will depend on the decisions being made during the transition, and I do not want to speculate on this.’

The Pound has seen losses in the run up to the referendum; however, Thursday’s latest YouGov poll showed the amount of ‘Yes’ voters (who are pro Scottish independence) has declined to less than half at 48%. With the referendum taking place on Thursday 18th September, Sterling is likely to be in for a bumpy ride in the coming week, and potentially for some time after depending on the outcome of the vote. Other than the referendum, next week will see the release of UK House Price figures on Monday, followed by Eurozone Trade Balance. Tuesday will prove more influential for the EUR to GBP exchange rate with the UK Consumer Price Index, alongside the UK Producer Price Index which will highlight current inflationary levels. Tuesday will also see significant Eurozone domestic data published, including the German ZEW economic sentiment surveys.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Daily Currency Updates Euro Forecasts