Euro to Pound Sterling Exchange Rate Forecast - EUR Declines Ahead?

January 25, 2016 - Written by John Cameron

STORY LINK Euro to Pound Sterling Exchange Rate Forecast - EUR Declines Ahead?

Disappointing European Data Weighed on Euro Demand Today

Another day, another disappointing set of eurozone economic statistics. This time it was the January edition of the closely-monitored IFO Business Climate survey which disappointed euro-holders, printing at well below the consensus expectation amongst analysts of 108.4. The result of 107.3 suggested that confidence levels amongst economic participants in the euroland are ebbing following the European Central Bank’s December decision not to extend the €60bn per month which it continues to allocate to its controversial Quantitative Easing programme.

The euro (currency : EUR) was dealt a double blow when the December version of the survey was downwardly revised to 108.6.

GBP to EUR Exchange Rate Close to 1.3200 Today

The disappointing data from mainland Europe suppressed support for the single currency and the Pound Sterling euro exchange rate improved to close to the 1.3200 GBP EUR threshold as a consequence.

The early part of the trading day had seen the pair slump from above the 1.3200 level towards the psychologically significant 1.3000 threshold. Investors holding euro-denominated assets will be looking to comments from ECB President Mario Draghi later today to fuel an immediate improvement for the EUR GBP exchange rate. Draghi would need to suggest that any increase in Quantitative Easing is firmly off the table in order for the shared currency to record renewed gains against the Pound.

However, such an outcome would appear unlikely given last week’s assertion from the Italian moneyman that his Bank will be reviewing QE at its March meeting.

In the weeks leading up to March any references to the potential expansion of quantitative easing are likely to put the Euro under pressure and see the common currency fall against its most traded rivals.

Tanking Crude Prices Causing CAD and NOK to Decline

Elsewhere, global oil prices have once again edged lower during today’s session. The price of a barrel of ‘Black Gold’ saw a sharp improvement during the final stages of last week, with Brent Crude gaining over 10% during the final 48hrs of trading alone.

However, oil prices have drifted downwards once again today, with Brent touching an intraday low of below $31 per barrel during early morning trading. The fresh shift lower in oil poses a clear and present data to the relative value of both the Norwegian Krone (currency : NOK) and the Canadian Dollar (currency : CAD) in the global currency markets.

Oil prices show no signs of stabilizing at the present juncture so we can expect further exchange rate volatility in the days ahead.

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TAGS: Euro Pound Forecasts Pound Euro Forecasts