Pound to Euro Forecast: More Gains for GBP EUR Exchange Rate on Nowotny Comments

December 8, 2014 - Written by John Cameron

STORY LINK Pound to Euro Forecast: More Gains for GBP EUR Exchange Rate on Nowotny Comments

Currency News UK presents our latest Pound to Euro (GBP/EUR) Exchange Rate Forecast and Predictions

European Central Bank (ECB) policymaker Ewald Nowotny spoke earlier today and his comments may weigh heavily on the euro (currency:EUR) into the medium term.

GBP Rates Today (10/12/2014)

The Pound to Australian Dollar exchange rate is -0.35 pct lower with a conversion rate of 1 GBP equals 1.88367 AUD.
The Pound to Canadian Dollar exchange rate is +0.25 pct higher with a conversion rate of 1 GBP equals 1.79911 CAD.
The Pound to Euro conversion rate is +0.03 pct higher at 1.26650 GBP/EUR.
The Pound to New Zealand Dollar exchange rate converts -0.24 per cent lower at 1 GBP is 2.03430 NZD.
The Pound to US Dollar conversion rate is +0.04 pct higher at 1.56916 GBP/USD.

ECB Nowotny Supports QE

The euroland reserve bank’s board member flagged-up a triple threat to the single currency and the Pound Sterling euro exchange rate improved to as high as 1.2744 GBP EUR as a consequence.

The President of the National Bank of Austria dealt the euro an initial blow when he stated that a programme of Quantitative Easing in the form of wide-scale sovereign debt purchases could be a ‘valuable’ tool which could be used as ‘a supportive measure in the context of a comprehensive plan’ to boost the euro area’s economy.

Nowotny Forecasts Lower Inflation

The second blow to the single currency came in the form of Nowotny’s observation that there is a ‘high probability’ that the pace of inflation in the eurozone will drop during the first part of next year.

The latest price rise numbers from the region revealed that inflation is currently tipping the scales at perilously close to the 0.0% level.

A reduction to below 0% would confirm that the euroland economy had slipped into deflation - a move which would surely prompt the ECB into a further loosening of monetary policy. Such a shift would propel the GBP EUR exchange rate well into the 1.3000s.

‘Massive Weakening’ in EZ Economy

The final hit to the single currency came when Nowotny gave his verdict on the general state of the eurozone economy.

He observed a ‘massive weakening’ in the region’s economic situation, adding to the market speculation that a bout of fully-blown Quantitative Easing is on its way.

The one anchor on such a move comes in the form of opposition from the euro area’s number one economic superpower.

Bundesbank Chief Jens Weidmann is a long-standing opponent of sovereign debt purchases from the euroland’s central bank. It would take some seismic shifts to convince Germany that QE is the best option – the nation remains suspicious of such a policy thanks to its desperate experience of ‘printing money’ during the 1930s.

However, some economists forecast that, with the price of a barrel of crude tumbling to fresh multi-year lows earlier today, such impetuses may be on their way.

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