Pound Euro Exchange Rate Forecast (GBP/EUR) To Gain, Pound to Dollar Could Drop

Modified: Tuesday, 13 August 2013 11:59 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Forecast (GBP/EUR) To Gain, Pound to Dollar Could Drop

Very little global data of note during yesterday’s session meant very little significant movement for the world’s major currency pairs. What price action there was for the leading tenders was centred around the high yielders, with the Pound to Australian Dollar (currency : GBP AUD) and the Pound to New Zealand Dollar exchange rates moving back into the 1.6900s and 1.9300s respectively.

The upward move for the two pairs was driven by a softening in the relative value of AUD and NZD caused by a dip in risk appetite rather than any specific Sterling strength. The downward move in the S&P 500 futures market in the States during yesterday’s session suggested that institutional investors are once again starting to believe that the US Federal Reserve will begin tapering its Quantitative Easing programme next month. The flight to safety which the mere thought of such a reduction in QE provoked meant that the US Dollar was relatively well-bid on the day, sending the Pound to US Dollar exchange rate (currency : GBP USD) down into the middle 1.5400s during early trading.

Today’s session promises to make up for yesterday’s dearth of tier one figures with a packed data schedule. This morning’s highlights include July’s UK CPI inflation data, penned in for publication at 0930hrs BST, and the latest German ZEW Sentiment Index, set for release 30 minutes later. A marked improvement from last month’s showing of 36.3 is anticipated from the closely-watched gauge of German confidence, with a showing of close to 40.0 expected. Anything less than this and the Pound euro exchange rate forecast could see the GBP/EUR could accumulate sharply.

This afternoon’s key data set is July’s US Advance Retail Sales figure. A print of 0.3% is anticipated – slightly down from last month’s showing of 0.4%. With such relatively limited expectations, and with the general tone of recent numbers from the US economy being positive, the potential exists for a pronounced bout of support for the Greenback during North America’s session. Such an outcome could see the Pound to US Dollar exchange rate (currency : GBP USD) retrace back down towards the 1.5000 threshold.

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