Pound Euro Exchange Rate (GBP EUR) Forecasted To Threaten 13-Month Low Following British PM?s Grave Debt Warning

Modified: Sunday, 6 January 2013 20:03 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate (GBP EUR) Forecasted To Threaten 13-Month Low Following British PM?s Grave Debt Warning

Thin trading volumes during the week between Christmas and the New Year saw the GBP EUR exchange rate break down to a new 8 ½ month low of 1.2158. Although the first few days of 2013 saw the Pound claw back some of the ground it lost over the festive period, taking the GBP EUR exchange rate back up to close to 1.2400 last Thursday, the pair remains locked in a technical downtrend, with consecutive lows getting lower.

Friday’s session brought renewed negativity towards Sterling, following the release of a worryingly weak PMI Services sector survey for last month – bad news for Britain’s ailing economy which remains heavily dependent on its tertiary industries for its future well-being.

Yesterday’s comments from British Prime Minister David Cameron reaffirmed his belief that the private sector should play an increasingly important role in the UK economy. Cameron asserted that a ‘re-balancing’ of UK economic activity is required, with further importance being placed on private enterprises, and less reliance on the state, moving forward.

Cameron went on to make some telling observations about the vital role which the bond market will take in Britain’s future fiscal wellbeing. Cameron described it as ‘hugely important’ that the UK retains its AAA credit rating. Given that all three major global credit ratings agencies, (S&P, Moody’s and Fitch), have all placed Britain on ‘credit watch’ in recent months, meaning that they estimate that there is a good percentage chance that the UK will suffer a debt downgrade, the British Premier’s words could be viewed as tempting fate. If one of more of the agencies does indeed downgrade the UK PLC’s debt rating in the near future, then a sharp fall for the Pound is almost certain, given Cameron’s comments yesterday.

Such an event would be likely to trigger a pronounced bout of selling pressure on the Pound Euro exchange rate (currency : GBP EUR), with last February’s 13-month nadir of 1.1756 providing a target should the pair’s post Christmas low of 1.2158 be convincingly broken.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Pound Eu Forecasts