1.4000 GBP EUR Forecast for Pound Sterling Euro Exchange Rate Sooner Rather Than Later

May 19, 2015 - Written by John Cameron

STORY LINK 1.4000 GBP EUR Forecast for Pound Sterling Euro Exchange Rate Sooner Rather Than Later

The Pound Sterling euro exchange rate GBP EUR enjoyed a boost during trading yesterday afternoon following comments from Greece’s maverick left-wing leadership. The Athens-based policymakers appeared to be indulging in a bout of high stakes brinkmanship when they instructed market participants, via an official government spokesman, that they needed a new debt deal ‘immediately’. The official went on to clarify that, without additional liquidity, the debt-addled Hellenic state would run out of funds before the end of this month.

GBP EUR had ben trading in the lower part of the 1.3600 – 1.3700 region earlier this morning as investors steered clear of the Pound over concerns that this morning’s UK inflation numbers might once again show no overall increase in British prices over the past 12 months. However, when New York opened for business yesterday afternoon, investors began factoring-in the urgency of Greece’s situation and moved against the shared currency. The upshot saw the pair track Northwards to 1.3823 GBP EUR.

The forward move for GBP EUR was provided by additional momentum by the downward shift for EUR USD on the day. By the middle part of the afternoon session in Europe, the pair had shed almost 1.0% of its value as investors began to price-in an ever-increasing likelihood that the bad data blip in the US is running its course. Inclement weather conditions in North America during the early months of 2015 have had a pronounced negative effect on key US data releases during recent weeks, with last month’s closely-watched US Non-Farm Payroll data proving to be particularly disappointing. Market commentators pushed back their forecasts for the timing of the next Federal Reserve interest rate hike as a result and the Dollar suffered a mini-sell off. The relative strengthening of the euro which followed also manifested itself via a downward movement for the GBP EUR exchange rate. However, this arbitrage trade now appears to be working itself out, leading many analysts to predict that, if this morning’s UK inflation data comes out better than expected, the GBP EUR exchange rate could break back into the 1.4000s sooner rather than later.

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