Pound to Euro BREAKING - GBP/EUR Exchange Rate Pushes Past 1.26, Sterling Forecast Positive

July 1, 2014 - Written by John Cameron

STORY LINK Pound to Euro BREAKING - GBP/EUR Exchange Rate Pushes Past 1.26, Sterling Forecast Positive

Thursday has seen the best Sterling exchange rates in 2014 for the Pound to Euro (GBP/EUR) as it pushed past 1.26 today, with other gains seen against the US, NZ and Australian Dollars.

Significant price action for the GBP to Euro rate was triggered earlier in the week after a slew of European economic data once more favoured the Sterling outlook

The early-morning news that that the pace of expansion in the UK manufacturing sector had unexpectedly increased last month helped the Pound register some decent early gains against the single currency.

The move saw the Pound euro exchange rate edge upwards from an early morning low of 1.2483 up to as high as 1.2533 a short time ago.

The move brings the pair to within a half a cent of its 20-month high and there could be further gains to come according to David Tinsley of BNP Paribas.

The former Bank of England policymaker noted the leading nature involved in the manufacturing survey following the news, stating that the key sector of the British economy is, ‘growing strongly, and work flows suggest this has legs. As this news flow is absorbed further, rate hike expectations for the first hike in the fourth quarter this year should harden.’

News from the eurozone, published within half an hour of this Sterling-positive release, threatened to derail the Pound’s near-term improvement against the euro.

Official statistics showed that the overall level of unemployment in mainland Europe decreased slightly in May, with some 18.5m eurozone residents remaining jobless. However, the number, which represented a very slight dip of 28,000 from the counterpart April number, failed to convince institutional investors and the euro remained under the kosh.

Meanwhile, an overnight PMI Manufacturing survey from China provided a boost for the Commodity Dollars.

The news that factory output from the world’s second most significant economy had grown at its fastest pace for six months caused the Pound Australian Dollar (GBP/AUD) and Pound New Zealand Dollar (GBP/NZD) exchange rates to dip by 0.31 and 0.10% respectively.

Analysts suggest that the improvement in activity of this key sector of China’s economy was down to a loosening of its monetary policy by the People’s Bank of China last month. The Chinese central bank announced that it would be cutting its Reserve Requirement Ratio (RRR), meaning that retail banks would now need to maintain a lower ratio of their assets in liquid format.

The idea behind the move was to encourage increased lending to businesses in China and last night’s publication lends the policy some credence. Analysts forecast that there could now be further gains to come for the Australian and New Zealand Dollars.

British Pound Euro, Sterling to Dollar & Other Foreign Exchange Rates - 20:00 GMT 03/07/2014

The Pound Sterling to Euro exchange rate is trading up +0.27% at 1.26035 GBP/EUR.
The Pound Sterling to US Dollar exchange rate is trading down -0.05% at 1.71519 GBP/USD.
The Euro to Pound Sterling exchange rate is trading down -0.27% at 0.79343 EUR/GBP.
The Euro to US Dollar exchange rate is trading down -0.33% at 1.36088 EUR/USD.

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