Pound Euro Exchange Rate (GBP EUR) Forecasted To Fall Further Following Break To New 9 ? Month Low

Published: Monday, 14 January 2013 09:00 BST - Written by James Fuller

STORY LINK Pound Euro Exchange Rate (GBP EUR) Forecasted To Fall Further Following Break To New 9 ? Month Low

Sterling slumped to its lowest level against the euro since April 2012 during Friday’s afternoon session in the currency markets, following the release of the latest edition of the closely-watched NIESR UK GDP growth estimate, which predicted that the British economy had contracted by 0.3% during the final three months of last year.

The publication of the NIESR’s figures confirmed the worst fears of investors holding Sterling-denominated assets, namely that the positive Q3 UK growth data appears to have been a mere flash in the pan which is attributable to one-off events including the Queen’s Jubilee and the London 2012 Olympic Games. The post-September return to normal service has revealed what a beleaguered state the UK economy currently stands in. With the Bank of England predicting that British economic activity will remain almost at a standstill during 2013, it now appears highly likely that the UK is about to enter an unprecedented ‘triple dip’ recession.

If tomorrow morning’s official UK government CPI inflation data for December shows at below the anticipated annualised 2.7% level, then analysts are likely to begin pricing-in a high percentage chance of further Quantitative Easing and a possible domestic interest rate cut from the Bank of England sooner rather than later. Such a ‘kitchen sink’ action from the UK’s central bank would surely send the Pound tumbling down towards its next key level of support against the euro which comes at 1.1756, a rate which GBP EUR last visited almost 11 months ago. Consecutive closes below this key interim floor would represent a break to a new 13 month low, sending out a strongly negative technical signal for the pair.

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