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Forecast: Pound Sterling to Euro Exchange Rate Hits 7 ? Year High of 1.3504 GBP/EUR

January 26, 2015 - Written by John Cameron

Latest Pound Sterling to Euro (GBP/EUR) Exchange Rate at Seven-and-a-half Year High



The Pound Sterling to euro exchange rate spiked at 1.3504 GBP EUR earlier today – its highest level since the final part of 2007.

The move was driven by the news that the Syriza party had won a stunning election victory in Greece, leading to widespread market whispers suggesting that a Greek exit from the eurozone was imminent.

The pair touched off its multi-year high at just before midnight last night, when speculation reached fever pitch.

Syriza Moderating?



However, the intervening period brought the rapid announcement from Syriza that it had reached an agreement with the centre-right Independent Greek party. Although the newly-formed coalition will be firmly anti-austerity, the moderating influence of the Independent Greeks on the hardline leftist Syriza party raised investors’ expectations that a messy Greek exit from the euroazone may yet be avoided.

QE Overshadows Greece



Sireen Harajli certainly thinks so; he stated earlier that, ‘the market is treating Syriza’s win as an anti-austerity movement more than an anti-euro movement. The bigger picture is QE instead of Greece.’

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GBP EUR Tracking Towards 1.4500?



The development served to becalm investors’ fears and the GBP EUR exchange rate edged lower off its range-topping rates of last night down to as low as 1.3323 a short time ago.

However, most analysts forecast that this is a short-term correction before the pair tracks higher once more.

The next historical level of resistance heading Northwards for the pair comes at the 1.4500 – a region which the pair loitered either side of for several years leading up to the middle part of 2007.

GDP Data Could Anchor Sterling Exchange Rate



However, tomorrow morning’s Q4 Gross Domestic Product data from the UK are not by any means guaranteed to be positive for the Pound Sterling.

The Q3 counterpart data printed at 2.6% and an improvement to 2.8% is expected by analysts.

Anything below this as a result and Sterling is likely to give up further ground against the single currency in the near-term.

The psychologically significant 1.3000 threshold will be likely to act as a key level of support for the pair in such a circumstance.
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