Forecast - Today's Pound Euro Exchange Rate Future Currency Predictions & Scottish Referendum Result

September 18, 2014 - Written by John Cameron

STORY LINK Forecast - Today's Pound Euro Exchange Rate Future Currency Predictions & Scottish Referendum Result

Foreign currency analysts had forecast that the future prospects for the Pound Euro exchange rate hinged on the Scottish Referendum result.

Meanwhile, the selling pressure on the euro (currency:EUR) increased thanks to official figures regarding its targeted Long Term Re-financing Operations from the European Central Bank.

The European Central Bank President Mario Draghi has chucked the proverbial kitchen sink at the euroland’s potential deflation problem since the start of the Summer, but unfortunately it appears that the kitchen unit he possesses may not be of sufficient weight to counter the problem.

Part of the ECB’s plan to avoid a damaging period of falling prices has been the introduction of a targeted Long Term Re-financing Operation (tLTRO) and today’s session in the currency markets has seen the release of details regarding the efficacy of this scheme. Unfortunately for Draghi and the euroland’s economy, the results proved disappointing.

The scheme, which was considered to be a central plank of the ECB’s expansionary monetary policy, gives European retail banks the chance to access ultra-cheap funding from the Frankfurt-based central bank. However, today’s official numbers revealed a highly disappointing level of uptake from the euro area’s caisses.

The numbers showed that €82.6bn had been accessed by European banks – well below the level anticipated by leading analysts.

Kit Juckes of Societe Generale stated earlier today that even if the amount forwarded had been as low as €100bn - €120bn, this would have been low enough to, ‘leave many fearing that the ECB is still doing too little, too late.’

Euro rate forecast improves as Pound hits two year best EUR exchange rate

The data added to the euro’s woes, sending the Pound euro exchange rate to its highest level for over two years at 1.2726 GBP/EUR.

There could be further gains to come in the short term for the pair if tonight’s exit polls hint that the Scotland has voted to remain as part of the UK, which is what market movement during today’s session has suggested.

The Pound has enjoyed a strong day’s trading as the Scottish people headed towards the polls, illustrating market participants’ confidence that the result of the referendum will go the way of the ‘No’ campaign.

With London’s FTSE 100, FTSE 250 and FTSE 350 closing up by 0.52%, 0.95% and 0.59% respectively, it would appear that equities and currency traders alike are confident that the United Kingdom will stay together.

The flipside of this is that a ‘Yes’ vote to independence will send the GBP EUR exchange rate Southwards by around 10%, with analysts forecasting that a move down towards the 1.1000 level is likely for GBP EUR.

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TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts