Have the Best 2014 Pound to Euro (GBP/EUR) and Pound to Dollar (GBP/USD) Exchange Rates Gone?

July 8, 2014 - Written by John Cameron

STORY LINK Have the Best 2014 Pound to Euro (GBP/EUR) and Pound to Dollar (GBP/USD) Exchange Rates Gone?

Have we seen the Pound Sterling (GBP) peak at the best exchange rates vs the US Dollar (USD) and Euro (EUR) in 2014? - The Pound Sterling has been one of the stand-out performers in the global currency markets during the past 12 months, climbing by 11% against a trade-weighted basket of other major tenders during this timeframe.

However, yesterday’s tame performance from the UK unit, which saw Sterling drop back into the 1.2400s against the euro, has sparked rumours amongst investors that the Pound may now be lodged firmly in the ‘overbought’ region.

The latest Sterling forex rates are:

- The pound to euro exchange rate is 0.07 pct lower at 1.25668.
- The pound to dollar exchange rate (GBP/USD) is 0.24 pct lower at 1.71165.
- The euro to pound exchange rate (EUR/GBP) is 0.07 pect higher at 0.79575.

The shift lower for the Pound euro (GBP/EUR) exchange rate came in spite of a highly disappointing set of German Industrial Production numbers which revealed that the powerhouse Teutonic economy had seen its largest drop in factory output for two years in May.

GBP/USD Leaks Support, Edges Down

Meanwhile, the Pound Sterling to US Dollar exchange rate also leaked support on the day, edging down into the low 1.7100s during the middle part of the European equities session as market participants began to factor-in the likelihood that US interest rates will be on the march Northwards very soon after the first UK base rate increase in a fresh Bank of England rate-hiking cycle.

Futures markets suggest that, following last Thursday’s super-strong American jobs figures which showed that the overall level of unemployment in the States had unexpectedly peeled back to 6.1% last month, the Fed will now opt to increase its key lending rate in June 2015. The same markets point to a Bank of England base rate hike in February of next year.

The close alignment of UK and US monetary policy has seen analysts at leading investment banks tripping over themselves to call a top in the Pound Sterling US Dollar market.

Geoffrey Yu of UBS predicted yesterday that GBP/USD will peak at 1.7300, (within 2c of where it currently sits), and that it will then peel back to as low as 1.6000 by the end of the year.

Meanwhile, Jim McCormick of Barclays Capital stated that as far as the Pound is concerned, ‘against the Dollar we’re probably about as far as we’re going to go because the risk here is the Fed’s going to have to start raising rates as well.’

Will the Pound to Dollar Soften on UK data?

With the Pound to Dollar exchange rate (GBP/USD) precariously poised, any small push in the form of a disappointing UK data release could have the potential to send the pair sharply lower. Look for this morning’s Industrial and Manufacturing Production data, out in the UK at 0930hrs BST as possible candidates for such a move.

EUR/USD Update 09/07/2014

Euro to Dollar Unflustered before FOMC Minutes, EUR Rate Steady

With European reports lacking on Wednesday the Euro to US Dollar exchange rate was holding steady during the local session.

Yesterday’s provocative comments from Fed official Narayana Kocherlakota continued to weigh on the US Dollar, as did the expectation that the FOMC minutes (due out later today) will be dovish in tone.

If the minutes reiterate the Feds commitment to keeping interest rates on hold for some time to come, the Euro could advance on the ‘Greenback’. Tomorrow’s monthly report from the European Central Bank could impact the EUR/USD pairing on Thursday.

Euro to Pound Exchange Rate up 0.1%, German CPI on Tap - Updated 10/07/2014

Before the Bank of England delivered its interest rate decision, the Euro to Pound exchange rate was enjoying a modest 0.1% gain.

The Pound has come under pressure over the last week as several UK reports have fallen short of forecasts, adding to the case in favour of the BoE leaving interest rates on hold. Unless today’s UK news is really surprising, the Euro to Pound pairing is likely to continue trending in its present range. However, tomorrow sees the publication of the German Consumer Price Index.

This could be a game changer for the EUR/GBP exchange rate pairing as the threat of deflation has been one of the main influences on European Central Bank fiscal policy in recent months. The nation’s final annual inflation figure for June is expected to be confirmed at 1.0%.

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