Exchange Rate Forecast: Pound to Euro To Fall To 1.2000 GBP/EUR if Feb 2014 UK PMI Disappoints

Modified: Tuesday, 4 March 2014 23:38 BST - Written by David Woodsmith

STORY LINK Exchange Rate Forecast: Pound to Euro To Fall To 1.2000 GBP/EUR if Feb 2014 UK PMI Disappoints

The Euro (currency:EUR) received a shot in the arm earlier when official figures showed that Spanish unemployment had fallen for the first time since 2007. The drop off of 1,949 in the joblessness number left the overall number of unemployed in the giant Iberian economy at a massive 4.81m, but the fact that this figure, which represents some 26% of the Spanish workforce, is now reducing provided a chink of light at the end of what has been a very long tunnel for Spain. The news helped to strengthen the single currency against the Pound, taking the euro Pound exchange rate down to as low as 1.2104 earlier EUR/GBP.

Elsewhere, the global equities markets have recovered their poise following a day of hefty losses during yesterday’s session. London’s FTSE 100 is trading up by over 1.5% on the day, while Frankfurt’s has clawed back 2.0% of the 3.5% which it gave up yesterday. The attendant improvement in global risk sentiment has seen the $VIX fear index drop back from yesterday’s levels of above 17.0 back down into the middle 15.00s once again.

With little in the way of data releases for the remainder of today’s European and North American sessions, the next tier one risk event of note comes at 00:30hrs this evening, when Australia releases its latest Gross Domestic Product figures for Q4. If they show at, or above, the expected annualised 2.5%, then look out for the Australian Dollar to gain further ground against the Pound Sterling and other currencies. In such an event, the next psychologically significant level heading lower for the Pound Australian Dollar exchange rate comes at the 1.8000 threshold GBP/AUD.

Looking ahead, tomorrow morning’s UK services sector Purchasing Manager Index of the services sector of Britain’s economy could also prove to be market-moving. If the February figures is as disappointing as the counterpart January print, the Pound euro exchange rate is forecast to fall back down towards 1.2000 GBP/EUR.

Key Euro Exchange Rates (As of: 12:30 GMT 04/03/2014)

The Pound Sterling to Euro exchange rate is trading down -0.04% at 1.21277 GBP/EUR.
The Euro to Pound Sterling exchange rate is trading up +0.04% at 0.82456 EUR/GBP.
The Euro to US Dollar exchange rate is trading up +0.18% at 1.37605 EUR/USD.
The US Dollar to Euro exchange rate is trading down -0.18% at 0.72672 USD/EUR.

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TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts