Pound Sterling to Euro Exchange Rate Close to Best in 12 Months, Forecasts See Further Gains 2014

Modified: Thursday, 9 January 2014 11:18 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Exchange Rate Close to Best in 12 Months, Forecasts See Further Gains 2014

Here are our Pound Sterling Exchange Rate Forecasts showing the Pound to Euro (GBP/EUR) gains predicted and the Pound to Dollar (GBP/USD) losses forecast:

Strong November shop sales figures from the eurozone earlier today partly mitigated the negative effect of this morning’s below par German import / export numbers.

The mainland European Retail Sales figures, which printed at an annualised 1.6% versus analysts’ expectations of a showing of 0.3%, provided a significant boon for the single currency, but they were not enough to stop the euro to Sterling exchange rate (EUR/GBP) trade down to as low as 0.8267 on the session.

Euro Currency Under Heavy Selling Pressure, Pound Euro Exchange Rate Trading Close to 12 Month High

The euro (currency:EUR) was already under heavy selling pressure in early trading this morning following the publication of German trade balance figures which revealed a lower than anticipated November trade surplus in the eurozone’s premier economy. The Pound to euro exchange rate is now trading within half a cent of its 12-month high of 1.2118 GBP/EUR. With the European Central Bank still appearing keen on a near-term loosening of its monetary policy in an effort to sustain the economic improvement which the region has enjoyed in recent months, further gains would appear likely for the pair in the short-to-medium term.

Elsewhere, strong employment figures published in the US in the last few minutes suggest that further cuts to the Federal Reserve Quantitative Easing programme may be close at hand. This afternoon’s ADP Employment Change figures for December, which measure the level of job creation in the private sector of the vast US economy, significantly beat expectations suggesting that Friday’s US Non-Farm Payrolls numbers may also provide grounds for encouragement regarding the American economy’s progress.

Pound Dollar Forecast Could Drop Back to 1.5000s GBP/USD Again

The Greenback remains weak against Sterling in spite of the US data, meaning that the Pound US Dollar exchange rate continues to trade in the 1.6400s GBP/USD. However, expect sustained losses for the pair if Friday’s jobs numbers significantly beat expectations. If any such data is accompanied by comments from Federal Reserve Chairperson Elect Janet Yellen suggesting that the days of QE are numbered, then look for GBP USD to drop back into the 1.5000s once more.

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