Pound to Euro Exchange Rate Forecast: Analysts Expect GBP EUR Rate To Rise As Euro Zone QE Rumours Escalate

May 15, 2014 - Written by Ben Hughes

STORY LINK Pound to Euro Exchange Rate Forecast: Analysts Expect GBP EUR Rate To Rise As Euro Zone QE Rumours Escalate

Pound to Euro Exchange Rate Forecast (GBP/EUR): A little-mentioned economic statistic, published in Germany during pre-trading in the lead-up to yesterday’s European equities session, may have pronounced ramifications for the future prospects for the euro (currency:EUR).

The latest Consumer Price Index data from the powerhouse Teutonic state pointed to a month-on-month decrease in the level of domestic prices of 0.2% adding to analysts’ impression that the mainland European economy is badly in need of a bout of expansionary monetary policy.

The latest Pound / euro exchange rates today:
- The Pound Sterling to Euro exchange rate is trading up +0.23% at 1.22527 GBP/EUR.
- The Euro to Pound Sterling exchange rate is trading down -0.24% at 0.81614 EUR/GBP.

Market participants may not have to wait for long for such a move – European Central Bank President Mario Draghi has dropped heavy hints over the past week that his bank will seriously consider the introduction of a version of Quantitative Easing for the eurozone. Yesterday’s data from Germany is likely to add to this impression.

The Pound slips vs the Euro yesterday

However, the Pound euro exchange rate slipped on the day yesterday notwithstanding the spectre of QE which now hangs over continental Europe, as the single currency recovered against the Pound. The dip to 1.2217 could represent the GBP EUR winding itself up before a sustained push higher. Investors needing top purchase euro-denominated assets will certainly be hoping so.

Euro forecast focus on Eurozone CPI inflation data

Looking ahead, this morning’s whole of eurozone CPI inflation number for April will be closely monitored following yesterday’s release from the eurozone’s premier economy. Economists’ expectations are low – the consensus being that the figure will reveal a year-on-year result of 0.7%. This would represent a slight increase from March’s annualised showing of 0.5%, but anything below the anticipated level would cause expectations regarding QE for the eurozone hot up.

Elsewhere, this afternoon’s US CPI inflation numbers also have the potential to prove market-moving. However, unless the figures show at a level wildly outside expectations of an annualised 2.0% then investors are likely to consider an ‘auto-pilot’ style taper of the Fed’s Quantitative Easing programme as a racing certainty. In such a circumstance, the GBP USD exchange rate is unlikely to alter.

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