Pound to Euro Predictions: GBP/EUR Exchange Rate is Forecast to Sink, US Dollar Gains

October 30, 2014 - Written by John Cameron

STORY LINK Pound to Euro Predictions: GBP/EUR Exchange Rate is Forecast to Sink, US Dollar Gains

Friday's forex trading session has brought the publication of two key data sets from the eurozone; however the brace of releases has, up to this point, failed to have the forecast effect on the Pound to euro exchange rate - GBP/EUR.

This morning’s German labour market numbers provided the single currency with a positive start to the day.

Although the overall unemployment figure for October came in as per expectations, remaining static at 6.7%, the total change in joblessness element of the numbers showed a pronounced drop of 22,000 – well ahead of the consensus expectation of analysts.

The Pound to Euro exchange rate converts +0.21 per cent higher at 1 GBP is 1.26953 EUR.
The US Dollar to Euro exchange rate is +0.08 pct higher with a conversion rate of 1 USD equals 0.79225 EUR.

Disappointing German Inflation Data

However, the go-ahead sentiment towards the euro proved to be short-lived; the eurozone unit has been suffering during recent weeks thanks to investors’ fears that the region is heading towards a damaging bout of deflation, and this afternoon’s German Consumer Price Index inflation numbers did little to allay these concerns.

The data revealed that the EU Harmonised year-on-year pace of price rises in the euroland’s premier economy had dipped to 0.7%, when most economists had been expecting a slight increase to 0.9%.

The figures add increased weight to tomorrow morning’s whole of eurozone version of the CPI numbers and another lowly showing from these could see the Pound Sterling euro exchange rate edge higher towards the 1.2900 GBP EUR threshold which it has stubbornly refused to break through since the Summer of 2012.

Unexpected Price Movement For GBP EUR

Price action for the Sterling euro exchange rate GBP EUR has been contrarian to say the least since the publication of the German inflation figures.

The pair has slipped from an intraday high of 1.2718 down to below the 1.2690 level in spite of the ostensibly euro-negative data.

They say that in the currency markets, ‘what should go up, and doesn’t go up, can only come down’; if this proves to be the case, then expect GBP EUR to ship considerable support as soon as there is a mildly Sterling-negative data release.

US Dollar Gains On GDP Numbers

Elsewhere, the US Dollar (currency:USD) enjoyed a fillip earlier when the latest domestic Gross Domestic Product figures printed at an above-expectations year-on-year level of 3.5%. The news would appear to make an interest rate hike a likely prospect from the Federal Reserve during the early part of next year, leading analysts to forecast that the Pound US Dollar exchange rate will settle back in the 1.500s in the short-to-medium term.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts