British Pound Sterling Euro GBP EUR Foreign Currency Forecast for 2016

December 23, 2015 - Written by John Cameron

STORY LINK British Pound Sterling Euro GBP EUR Foreign Currency Forecast for 2016

2015 Currency Catch up for GBP-EUR Exchange Rate Trading

2015 has been a year of considerable upheaval for the Pound Sterling (currency : GBP). As the year began, the UK unit was just recovering from the hangover caused by the previous September’s Scottish referendum; the lead-up to the popular ballot saw the Pound lose significant ground against the other sixteen most actively traded global currencies as investors factored-in a real and present danger that the Union might be about to break up.

ECB Stimulus Sees Pound to Euro Climb to Best Rates

However, events during the early part of 2015 saw market focus move to the UK’s near neighbour the euroland, with the announcement from the European Central Bank (ECB) that it was introducing a large-scale bond purchase scheme aimed at steering the euroland economy away from deflation. The fall-out from the announcement of a monthly €60bn worth of Quantitative Easing from the ECB for the foreseeable future sent the Pound Sterling euro exchange rate hurtling Northwards towards the middle part of the 1.4000 – 1.5000 range by early Autumn.

GBP-EUR 2016 Forecast: Could the Pound Hit 1.5000?

GBP EUR has peeled back dramatically during the final few weeks of 2015 as euro-holders expressed their relief at the ECB’s December announcement that it would be maintaining its bond purchases at their current level of €60bn per month.

Looking ahead, with global oil prices continuing to plumb the very bottom of their multi-year range during the past few days, it would appear likely that the spectre of deflation will prove hard for the depressed eurozone economy to shrug off into the medium term. The upshot is likely to see the ECB further loosen its already ultra-loose monetary policy next year. Such an occurrence is forecast to send the Pound euro exchange rate Northwards to a fresh 8-year high above the 1.5000 GBP EUR level in the middle part of 2016. The latest forecast from the National Institute of Economic and Social Research (NIESR) predicting a UK interest rate hike for February, gives us increased confidence in this forecast.

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TAGS: Daily Currency Updates Euro Forecasts Pound Sterling Forecasts