Pound Euro Forecast June 2014: Has Move Against EUR Currency Been Overcooked?

Modified: Thursday, 29 May 2014 15:54 BST - Written by John Cameron

STORY LINK Pound Euro Forecast June 2014: Has Move Against EUR Currency Been Overcooked?

Here's our Pound Euro Forecast for June 2014 - has the move against EUR been overcooked? European election results, published at the start of this week’s session in the global currency markets, revealed that anti-EU parties had made strident gains, with France’s National Front and Britain’s UK Independence Party both registering unlikely victories in their respective jurisdictions.

The Pound Euro exchange rate is trading down -0.06% at 1.22891 GBP/EUR. The Euro Pound exchange rate is therefore trading at 0.81373 EUR/GBP.

Euro Pound exchange rate gains as EUR support mounts

Paradoxically, the strong showing from political movements calling for an end to the EU project did not stop the euro (currency:EUR) posting decent gains against the Pound Sterling during yesterday’s session. The renewed bout of support for the single currency sent the euro Pound exchange rate up to an intra-day high of 0.8143 EUR/GBP. With yesterday morning’s session also bringing the release of a tame set of German job creation data, most analysts expected that the euro might lose grounds against Sterling on the day.

EUR forecast looks on next week's ECB policy decision

Most euro-watchers appear to have discounted the worrisome EU election results by the start of yesterday’s session and were instead concentrating on the main event of next week – the European Central Bank’s much-vaunted policy decision. Valentin Marinov of Citigroup commented yesterday that, ‘it’s what the ECB is going to do next week, rather than the election results, that is the key driver of the euro’ at this stage.

GBP EUR recent highs

The shared currency incurred hefty losses against the other majors at the start of this month when ECB President Mario Draghi dropped heavy hints in his post policy announcement press conference that his Bank was set to embark on its own version of Quantitative Easing. Investors moved against the euro in response, sending the GBP EUR exchange rate up to a fresh 16 ½ month high of close to 1.2400 less than a week ago. However, price action for the euro since this time suggests that the eurozone unit was oversold and market participants are becoming increasingly less sure that next week will indeed yield a ‘big announcement’ from the ECB.

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TAGS: Daily Currency Updates Euro Forecasts Euro Pound Forecasts Pound Eu Forecasts