Currency Analysts Forecast 1.2000s for British Pound Sterling to Euro Exchange Rate

January 28, 2016 - Written by Toni Johnson

STORY LINK Currency Analysts Forecast 1.2000s for British Pound Sterling to Euro Exchange Rate

GBP to EUR Exchange Rate at 1.3100 following British Gross Domestic Product

This morning’s British Gross Domestic Product statistics, covering the final three months of 2015, came in almost exactly as per analysts’ expectations, pointing to a relatively healthy 0.5% increase in UK economic activity during the final 3 months of last year. The data showed that the services sector was almost entirely responsible for the growth, prompting concerns over the unbalanced nature of the UK economy.

However, the British Pound (currency : GBP) has still struggled to assert itself against the other sixteen most widely traded global currencies on the session. The Sterling euro exchange rate was trading in the upper part of the 1.3100 – 1.3200 range during early trading, but the pair slumped back below the 1.3100 GBP EUR exchange rate in the aftermath of the key release from the Office of National Statistics.

Positive George Osborne regarding GDP not Enough to Bolster Sterling Exchange Rates Significantly

Unsurprisingly, UK Chancellor of the Exchequer George Osborne attempted to put a positive spin on the figures, commenting in a statement issued by the Treasury after the release of the GDP data that, ‘despite turbulence in the global economy, Britain is pushing ahead.’

He went on to observe that, ‘with the risks we see elsewhere in the world, there may be bumpy times ahead – so here in the U.K. we must stick to the plan that's cutting the deficit, attracting business investment and creating jobs.’ It would appear from price action for the Pound today that investors are not so sure.

'Brexit' Uncertainty Forecast to Continue to Weigh on Sterling Investor Confidence

Chris Williamson, Chief Economist at Markit, chose to take the ‘glass half empty’ line on the numbers, which showed the weakest level of annualised UK economic growth since the start of 2013.

Looking to the future, Williamson noted that, ‘uncertainty over 'Brexit', weak overseas growth and financial market volatility are all creating an unsettling business environment and point to downside risks to the economy in 2016.’

He went on to forecast that, ‘the coming year could easily see the pace of economic growth slow further from last year's 2.2 percent expansion, and the chances are growing that we will see yet another year in which interest rates are left at their record low of 0.5 percent.’ These are the self-same sentiments which have led many analysts to forecast that the GBP EUR exchange rate will drop back into the 1.2000s sooner rather than later.

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TAGS: Euro Forecasts Pound Euro Forecasts Pound Sterling Forecasts