Long Term Euro to Pound Sterling Forecast Improves

April 28, 2015 - Written by John Cameron

STORY LINK Long Term Euro to Pound Sterling Forecast Improves

The relative value of the euro (currency:EUR) has been hit hard since the turn of the year following the European Central Bank’s January announcement that it was set to embark upon an unprecedented €1.14 trillion Quantitative Easing programme. Mario Draghi, President of the euroland’s reserve bank, announced at the time the scheme was made public that it would run until September 2016, but his confirmation of this date as the finishing line for QE left one question hanging in the air – how will it all end?

The US Federal Reserve ended it third, and most presume final, tranche of Quantitative Easing since the 2009 credit crisis last Autumn. The Fed had been tapering down its monthly bond purchases since the previous December, until final reaching zero. The slow withdrawal was seen by many economists as a way of appeasing the financial markets, but according to a survey published yesterday, two thirds of those same economists believe that the ECB will not follow suit and that its asset purchase scheme will come to an abrupt end.

Julien Manceaux of ING Bank posited yesterday that, ‘one could argue that if inflation gets on the right track before the summer of 2016, some tapering appears in May, but then they are likely to miss their balance-sheet expansion target. This is why we do not think there will be tapering before the program stops.’ Such expectations mean that, although the shared currency is expected to endure sustained selling pressure during the next 15 months, it could enjoy a strong and pronoiunced bout of renewed support during Q4 2015.

Looking ahead, the main event during today’s session comes in the UK in the form of the latest quarterly Gross Domestic Product data. The previous set of domestic growth data, published in January, revealed that the British economy expanded by 0.6% during Q4 2014. A slight decrease to 0.5% represents the consensus expectation amongst analyst for this morning’s figure – anything North of this as a result and the Pound Sterling is forecast to register strong gains against the other sixteen most actively traded global currencies.

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