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Losses Forecast for Pound Sterling Euro Exchange Rate GBP EUR

May 18, 2015 - Written by John Cameron

The Pound Sterling (currency:GBP) outperformed all of the other sixteen most actively traded global currencies during last week’s session in the global currency markets. The renewed push for the UK unit was fuelled by the previous week’s surprise election victory for the Conservatives in Britain’s General Election and the resulting movement saw the Pound euro exchange rate power back above the 1.4000 GBP EUR threshold early on Wednesday Meanwhile, the Pound Sterling US Dollar exchange rate looked like it might have the legs to break through the 1.6000 GBP USD barrier during the second half of the week. However, both GBP EUR and GBP USD ended Friday’s session with a whimper rather than a bang, leading analysts to forecast that the Pound’s mini-Bull Run might be coming to an end.

This week’s session has the potential to provide the retracement endured by the Pound at the end of last week with real legs. Two highlights stand out for Sterling-watchers – tomorrow morning’s UK inflation numbers and Wednesday’s minutes of the latest Bank of England monetary policy meeting. The pace of price rises in Britain stood at zero per cent last month – analysts are anticipating a repeat performance from the annualised version of this month’s edition of the closely-watched Consumer Price Index numbers. Anything into positive territory will therefore help the Pound, whereas a sub-zero reading will cause investors to push back their expectations regarding the timing of the next domestic interest rate hike.

Market participants will learn more about the thoughts of the BoE’s nine-man monetary policy committee early on Wednesday; last month’s meeting saw a nine-zero whitewash for those members in favour of maintaining the Bank’s Base Rate at its current record-low level of 0.50%. One or more dissenters this month, (which would appear more likely thanks to the slight revival in global oil prices), would bring increased support for the Pound.

Meanwhile, those looking for upside for the Pound Sterling euro exchange rate will have been pleased with comments from Greek Prime Minister Alexis Tsipras on Friday. The Greek premier outlined his ‘red lines’ for debt negotiations some time ago – no further cuts to state wages or pensions. The Athens supremo commented that, ‘there’s no doubt that an agreement must be reached. But those who think that the Greek side’s resistance can be tested or that its red lines will fade as time passes, would do well to forget it.’
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