Euro Exchange Rate Today: Pound Sterling to Euro Back Below 1.2000 GBP/EUR, Losses Forecast For Euro Dollar

Modified: Thursday, 5 December 2013 14:58 BST - Written by Tim Boyer

STORY LINK Euro Exchange Rate Today: Pound Sterling to Euro Back Below 1.2000 GBP/EUR, Losses Forecast For Euro Dollar

The Euro (currency:EUR) has staged a concerted comeback against the Pound (currency:GBP) during this afternoon’s session. The move in favour of the single currency sent the Pound Euro exchange rate back down below the 1.2000 GBP/EUR threshold a short time ago as market participants responded to comments from European Central Bank President Mario Draghi in his post-announcement press conference. Draghi announced that his Bank has upgraded its 2014 whole of eurozone GDP growth forecast to 1.1%. The development saw market participants buy back into the euro, sending GBP EUR lower.

Further Loosening of Monetary Policy Could Send Pound Euro Exchange Rate Back Up

Although the kneejerk reaction to Draghi’s words was negative for GBP EUR, this situation is by no means guaranteed to persist, given the other information which Draghi imparted this afternoon. The ECB President also announced that the ECB is lowering its 2013 and 2014 CPI inflation projections from 1.5% to 1.4% and from 1.1% to 1.3% respectively. He also stated that the ECB technically ready for negative deposit rates. The suggestion of a further loosening of monetary policy in the eurozone has the potential to weigh heavily on the single currency moving forward, meaning that a near-term break back above its 10 ½ month high of 1.2121 could be possible.

Elsewhere, this afternoon’s US Gross Domestic Product figures showed at an annualised 3.6% - well ahead of the consensus amongst economists that a 3.1% showing was likely. The number, which showed a healthy increase from Q2’s counterpart print of 2.8%, surely means that the US Federal Reserve is likely to begin tapering its $85bn Quantitative Easing programme in the very short term. The euro US Dollar exchange rate (EUR/USD) is currently sitting at 1.3642 but the combination of any delayed reaction to Mario Draghi comments of earlier and the positive US GDP data has the potential to send the pair rapidly back down to the 1.3000 threshold.

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