Pound Euro Outlook: GBP EUR Exchange Rate Predicted To Climb

April 3, 2014 - Written by John Cameron

STORY LINK Pound Euro Outlook: GBP EUR Exchange Rate Predicted To Climb

Trading in the global currency markets during yesterday’s session was subdued as investors sat on their hands ahead of a raft of keynote data releases across the eurozone and the UK today.
A pair of PMI services readings from mainland Europe and Britain lead the way at 0930hrs BST. Analysts’ expectations are for the eurozone version to be outperformed by its UK counterpart, so expect the Pound to land the first blow of the day against its European rival currency.

The Pound Sterling to Euro exchange rate is trading down -0.08% at 1.20672 GBP/EUR. The Euro to Pound Sterling exchange rate is trading up +0.08% at 0.82869 EUR/GBP.

Shortly afterwards, at 1000hrs BST, comes the publication of this month’s Retail Sales figures from the euroland. Analysts are anticipating a slight year-on-year increase of 0.8% for the shop sales number – hardly stellar stuff. If the figure fails to tip the scales at or above this relatively modest expected level, then look for the Pound euro exchange rate to edge through the 1.2100 threshold GBP EUR.

However, all of these morning releases are relatively unimportant compared to the day’s main event – the European Central Bank policy decision at 1245hrs BST and ECB President Mario Draghi’s press conference which follows at 1330hrs BST. The consensus amongst economists is that the ECB will opt to maintain its key lending rate at its current 0.25% for another month. However, the announcement has the potential to be far from a damp squib even if this proves to be the case; market whispers suggest that Europe’s central bank may be considering its own version of Quantitative Easing aimed at steering the euroland economy away from a potentially damaging bout of deflation.

Even if the ECB announcement yields no news of an alteration to its policy stance, comments hinting at a further loosening of monetary policy from ECB President Mario Draghi 45 minutes later could see investors abandon the single currency. Draghi’s questions and answers session is bound to see him grilled about Monday’s whole of eurozone CPI inflation data, which showed at 0.5% - perilously close to the zero percent level which would signify a flatlining of prices in the region. Draghi may have to offer the markets some indication of a looser monetary policy to come in order to assuage investors’ concerns regarding deflation.

For these reasons, many investors consider the outlook for the Pound euro exchange rate GBP/EUR to be NEUTRAL TO POSITIVE.

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