British Pound to Euro OUTLOOK - GBP/EUR Exchange Rate Analysis, Forecast & Predictions June 2014

Modified: Monday, 30 June 2014 15:02 BST - Written by Frank Davies

STORY LINK British Pound to Euro OUTLOOK - GBP/EUR Exchange Rate Analysis, Forecast & Predictions June 2014

Weekly outlook for the Pound to Euro (GBP/EUR) Exchange Rate (20-27 June 2014) At the start of the week the Pound was holding onto a five year high against the US Dollar and was trading above the psychologically key level of 1.25 against the Euro. Monday saw a distinct lack of domestic market moving data for the UK and as such the Pound was at the mercy of events in Europe and elsewhere.

The latest GBP and EUR forex positions for your reference are:

- The pound to euro exchange rate is -0.04 per cent lower at 1.24814 GBP/EUR.
- The pound to dollar exchange rate is +0.1 per cent higher at 1.70528 GBP/USD.
- The euro to pound exchange rate is +0.04 per cent higher at 0.80119 EUR/GBP.
- The euro to dollar exchange rate is +0.14 per cent higher at 1.36625 EUR/USD.

The Sterling Euro pair then managed to edge higher after the single currency was weakened by concerns over the health of the French economy. Data showed that the nation’s manufacturing and services sectors contracted for a second consecutive month in June. The currency was also knocked as Eurozone PMI reports came in below expectations.

Sterling tumbles below 1.25 on Tuesday

On Tuesday GBP tumbled below the key 1.25 level against the EUR after the currency was weakened by dovish comments made by Bank of England Governor Mark Carney. In testimony to parliament’s Treasury committee, Carney said that the exact timing of rate rises would be driven by data and reiterated that when rate hikes did come they would be limited and gradual; investors were widely disappointed by his words.

The Euro took advantage of Carneys more dovish than expected words and made gains against the Pound. It rose despite the release of data which showed that German business confidence fell in May. Concerns over the Ukraine crisis re-emerged however taking some of the strength from the Euro’s sails. A ceasefire between the Ukrainian government and Pro-Russian Rebels was put in doubt after a Ukrainian helicopter was shot down, killing all personnel on board.


Midweek the Pound remained lower against most of its major peers as it continued to be weighed down by the dovish comments made by Bank of England Governor Mark Carney. Against the US Dollar the Pound briefly slipped to a one-week low before regaining ground following poor US data and slipped further away from the 1.25 level against the Euro.

The Euro meanwhile advanced to a two-week high against the US Dollar and pushed higher against the Pound as both of those currencies were weakened by data and comments from their respective Central Banks. The single currency also found some support from a better than expected German consumer confidence report. A consumer confidence report for France also came in slightly higher than forecast.

BoE report boosts the GBP/EUR rate

On Thursday Sterling made a strong comeback comeback after the Bank of England eased concerns that measures intended to cool down the UK’s overheating housing market would have little impact upon the overall economy. As a result the GBP/EUR exchange rate rallied higher by half a cent to push back above the 1.25 level.

“Without policy action, the risk of excessive household indebtedness is material. The policy package is targeted to mitigate this risk in a prudent and proportionate fashion,” said the BoE.

The Pound was little changed on Friday following the release of the latest UK GDP data. The data widely matched economist expectations. As a result the Pound ticked higher and found further support from the news that the currency is set to make its longest run of quarterly gains since 2007.

“It is quite hard to imagine sterling might lose ground unless there is a sharp reversal in the outlook for the economy or the message from the BoE. The UK data on a broad basis continues to come on the strong side,” said a senior currency strategist at UniCredit SpA.

The Euro meanwhile softened against the Pound as the latest Eurozone business, consumer and industrial confidence data all came in below forecasts.

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