Best Exchange Rate for Pound to Euro as Forecasts Predict GBP EUR to Advance to 1.2894

August 11, 2014 - Written by John Cameron

STORY LINK Best Exchange Rate for Pound to Euro as Forecasts Predict GBP EUR to Advance to 1.2894

Currency News UK - The best Pound to Euro exchange rates of 2014 could be beaten, with analysts predicting 1.2894 for the GBP/EUR pair - The euro (currency:EUR) enjoyed a significantly better week against the Pound Sterling last week, sending the euro to Pound down to an intraday low of 0.7996 EUR/GBP on Friday. However, analysts are forecasting that this week’s session may not be such a positive one for the single currency.

German trade data, published on Friday, revealed a month-on-month increase in German imports of a healthy 4.5%. This figure represented the strongest monthly increase for shipments into the Teutonic powerhouse economy for the best part of four years. Meanwhile, the level of exports by German enterprises increased by 0.9% - nearly twice the rate anticipated by experts.

However, on the debit side, a survey by the Bank of France, also out on Friday, painted a bleak picture regarding the future prospects of the euroland’s second most significant individual economy. The Gallic central bank predicted in its monthly business climate survey that France’s economy will expand by a barely-gaugeable 0.2% during the third quarter of this year.

The news from France adds increased weight to this Thursday’s German Gross Domestic Product data. The consensus expectation amongst analysts is that the key figure may reveal that economic growth in the euro area’s premier economy stalled during the three months to the end of June. Q1’s counterpart figure printed at a blockbusting 0.8%, thanks in part to the unseasonably clement weather conditions during the early part of this year. A poor GDP print on Thursday would have the potential to rapidly propel the Pound Sterling euro exchange rate Northwards to its 23-month high of 1.2700 once more.

The big story which has the potential to push GBP EUR forward to fresh multi-month highs remains the awkward stand-off between the eurozone and its near neighbour and key trading partner Russia over Moscow’s recent actions in Ukraine. An exemplar of the importance which the former Soviet state plays in the future performance of the euroland economy is provided by a closer reading of Friday’s German trade figures.

Exports to Russia, which comprise 3.3% of Germany’s total shipments, sank by 15% during the first five months of this year. Last week’s announcement of swingeing sanctions from Moscow, preventing inward purchases of a raft of goods from the eurozone, are likely to almost wipe-out the Russian element of German export figures during coming months.

The one mitigating factor for the euro in all of this is that the UK is also being hit with a similar trade embargo. Notwithstanding this, a move towards its 70 month high of 1.2894 could be on the cards for GBP EUR in the near-term.

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