Euro Exchange Rate Forecast: Gains Predicted For Pound Sterling to Euro (GBP EUR)

Modified: Wednesday, 9 October 2013 09:31 BST - Written by Tim Boyer

STORY LINK Euro Exchange Rate Forecast: Gains Predicted For Pound Sterling to Euro (GBP EUR)

A downbeat forecast for the future prospects for the global economy from the International Monetary Fund during the middle part of yesterday’s North American equities session caused a marked turnaround for several of the world’s major currency pairs.

The Pound to Euro exchange rate (GBP/EUR) is currently trading down by 0.01% at 1.1851 GBP/EUR. The Euro to Pound exchange rate is currently trading at 0.8438 EUR/GBP.

As recently as last July, the IMF had predicted an annual GDP growth rate of 3.2% for the world economy, but yesterday’s report saw the respected institution trim its forecast to 2.9%. The news saw the high-yielding Commodity Dollars suffer a sharp bout of selling pressure. The first half of the day had seen AUD and NZD perform relatively well, but the IMF’s downbeat missive saw them give up ground once more as global stocks and investor sentiment ebbed. The upshot saw the GBP AUD exchange rate and the GBP NZD exchange rate climb to 1.7079 and 1.9438 respectively.

Meanwhile, the bad news from the IMF ensured that the euro, which has been behaving in a decidedly risk-sensitive fashion of late, remain under pressure, ensuring the GBP EUR exchange rate spent the latter part of the US equities session trading in the upper half of the 1.1800 – 1.1900 trading range. Support for the pair was bolstered by the IMF’s increase in its forecast for UK economic growth in 2013 from 0.9% to 1.4%.

Many analysts are predicting further gains for GBP EUR during today’s session thanks to that one of the eurozone’s most recent entrants is facing up to a dire funding crisis. Bostjan Jazbec, the top man at Slovenia’s central bank, announced yesterday that he was considering approaching the EU/IMF/ECB Troika for emergency funding. With the level of bad debts held by Slovenia’s retail banks running at an estimated 22.5% of the nation’s annual GDP, that approach may have to take place sooner rather than later.

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