Pound Sterling to Euro Exchange Rate (GBP/EUR) Forecast Heads Higher Following Trade Data

May 16, 2014 - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Exchange Rate (GBP/EUR) Forecast Heads Higher Following Trade Data

Pound to Euro (GBP EUR) Exchange Rate Forecast 2014: The consensus amongst economists following this morning’s whole of eurozone trade data has seen the near term forecast for the Pound Euro exchange rate forecast edge higher. The Sterling to Euro exchange rate is currently trading up +0.27% at 1.22762 GBP/EUR.

Whole of eurozone trade balance numbers for March, published this morning, came out well above expectations, printing at €17.1bn. Analysts had been anticipating a showing of 16.0bn, so the figure provided grounds for some optimism regarding the future prospects of the eurozone economy.

GBP to EUR made gains early on

However, the more cynical element amongst economists monitoring the release suggested that the relatively strong figure provided further evidence that the eurozone economy continues to lag behind the curve in comparison to other western nations’ and that the large trade surplus was driven by a weak level of domestic demand for pricier foreign imports, whilst export markets were showing an increased appetite for exported goods from the euroland. Currency market participants shared this view and the Pound euro exchange rate moved up to 1.2277 GBP/EUR earlier on.

The euro (currency:EUR) continues to lack support in the markets thanks to yesterday’s tame eurozone GDP growth figures; although the euro area economy expanded for the fourth quarter on the trot. growth of 0.2% hardly registered with market participants and it appears increasingly likely that the region’s economy is, in real terms at least, stagnating.

Pound to Euro forecast to gain

This impression has been added to by recent German ZEW Index surveys – considered to be a good leading indicator of economic activity – the most recent version of which has shown its fifth decrease in succession. The weight of these recent data sets has increased calls on ECB President Mario Draghi to introduce an even looser monetary policy stance at his Bank’s next meeting. Although an all-out bout of QE is unlikely due to German hesitancy, a cut to negative overnight interest rates or the introduction of a similar scheme to the bank of England’s ‘Funds For Lending’ policy might be on the cards. In such an event, economists forecast that the Pound Sterling euro exchange rate will head higher once again.

Euro Exchange Rates Today - 16 May 2014

The Euro to Australian Dollar exchange rate is trading down -0.1% at 1.46473 EUR/AUD.
The Euro to Canadian Dollar exchange rate is trading down -0.01% at 1.49189 EUR/CAD.
The Euro to Pound Sterling exchange rate is trading down -0.27% at 0.81459 EUR/GBP.
The Euro to New Zealand Dollar exchange rate is trading up +0.21% at 1.58848 EUR/NZD.
The Euro to US Dollar exchange rate is trading down -0.02% at 1.37137 EUR/USD.

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