Pound Euro Forecast: GBP EUR Exchange Rate Makes Run at 10 1/2 Month High

Modified: Friday, 29 November 2013 19:10 BST - Written by David Woodsmith

STORY LINK Pound Euro Forecast: GBP EUR Exchange Rate Makes Run at 10 1/2 Month High

The Pound euro exchange rate (GBP/EUR) has shown several instances of counter-intuitive price movement during the weeks since the European Central Bank opted to cut its key lending rate to a new all-time low of 0.25%. By rights, GBP EUR was forecasted to have shot higher and established itself firmly in the 1.2000s on the news, so the fact that the pair started today’s session in the 1.1900s comes as some surprise.

Two Euro Zone Positives Expected to Send Pound Euro Exchange Rate Downwards

Today’s session brought the release of two ostensibly positive developments from the eurozone which most analysts would have expected would send GBP EUR downwards. This morning’s regional unemployment data revealed that the overall level of joblessness in mainland Europe unexpectedly dropped from 12.2% in September to 12.1% in October. Although the reduction was a slim one, the fact that conditions in the eurozone’s under-pressure labour market appear to be ameliorating sendt out a positive signal for the future prospects of the single economic area.

The second piece of good news regarding the eurozone today came from leading credit ratings agency Standard & Poors, who issued a report which upgraded the outlook for Spain’s troubled economy. S&P upped its assessment of the Iberian economy from ‘negative’ to ‘stable’, providing investors holding the single currency with reasons for optimism.

The Pound Sterling to Euro Rate Spent Today Just Below 1.2000 GBP/EUR Threshold

However, currency market participants were far from convinced by the pair of positives from Europe. The Pound euro exchange rate spent virtually the whole of today’s UK equities session loitering just below the 1.2000 threshold, but the pair has made a concerted run at its 10 ½ month high of 1.2048 during after-hours trading in London. By rights GBP EUR should have headed lower given today’s economic fundamentals. The fact it hasn’t sounds a strong positive signal for the pair and many see a strong Pound euro forecast – from a EUR seller’s perspective ‘what should go up and doesn’t go up can only come down’.

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: Currency Predictions Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts