GBP EUR FX? 3 Reasons NOW is Best Time To Buy British Pound to Euro Exchange Rate!

October 8, 2014 - Written by John Cameron

STORY LINK GBP EUR FX? 3 Reasons NOW is Best Time To Buy British Pound to Euro Exchange Rate!

Our foreign exchange rate expert gives you his take on why you should trade the GBP EUR, i.e. buy euros and sell pound sterling today:

If you're looking to buy property in France or Spain and require a Pound to euro money transfer, then here's three reasons why our resident forex tradig expert thinks now is the right time.

A quick look at where the Pound and the Euro place today:

- The pound to euro exchange rate is -0.06 per cent lower at 1.27058 GBP EUR.
- The us dollar to euro exchange rate is -0.18 per cent lower at 0.78947 USD EUR.
- The aus dollar to euro exchange rate is +0.33 per cent higher at 0.69598 AUD EUR.

1. Draghi’s Promise To Save The Euro (currency:EUR) Is Likely To Force GBP EUR Higher

   
   
   Soon after European Central Bank President Mario Draghi took over at the helm of the euroland’s reserve bank, he confidently informed journalists during a post-policy announcement press conference that he would do ‘whatever it takes’ to save the single currency.
   
   The intervening period has seen Draghi drastically loosen his Bank’s monetary policy, with the region’s retail banks now being charged to park funds with the ECB on an overnight basis.
   
   
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   Meanwhile, the ECB’s key lending rate has dropped to almost zero percent and a programme of targeted Long Term Refinancing Operations, aimed at increasing the flow of funds into the euro area’s retail banks, has been instigated.
   
   The logical conclusion to Draghi’s ‘whatever it takes’ strategy would be all-out Quantitative Easing for the region which would see the ECB buy up member states’ sovereign debt. It looks likely that this will become a reality – when it does expect the euro to ship support.
   
   

2. The Risk of Deflation Continues To Weigh Down The Euro

   
   
   Last week’s whole of eurozone Consumer Price Index inflation figures showed that the rate of price rises in continental Europe had plunged to 0.3% last month.
   
   Meanwhile, the core CPI numbers showed an unexpected drop from 0.9% to 0.7%, suggesting that the euroland’s economy is edging towards a paralysing bout of deflation.
   
   Last Thursday’s comments from Mario Draghi revealed a level of anxiety regarding falling global oil prices and any continuation of the trend lower of the price of a barrel of crude could bring negative prices in the eurozone.
   
   Such an outcome would make Quantitative Easing a near racing certainty from the ECB, propelling the Pound euro exchange rate up through the 1.3000 GBP EUR threshold sooner rather than later. Another strong reason not to be holding the single currency moving forward.
   
   

3. Has The Correction For The Pound Sterling (currency:GBP) Now Worked Its Way Out?

   
   
   The Pound enjoyed a strong twelve months leading up to the early part of Summer, outperforming all of the other sixteen most actively traded global currencies.
   
   However, the past three months have brought a considerable correction for the UK unit as investors expressed their fears that Scotland might break away from the remainder of the United Kingdom.
   
   When the Scottish people delivered a resounding ‘No’ vote to independence, Sterling initially enjoyed a marked relief rally, but this has since dissipated.
   
   It seems likely that, as we head towards the end of the year, market participants will once again concentrate on the relative economic fundamentals in the UK and the eurozone.
   
   Jane Foley of Rabobank certainly thinks so; she stated yesterday that, ‘the divergence between the U.K. and the eurozone is still there, has been the dominant story for a while and it will be for some time to come.’
   
   Expect GBP EUR to gain as a consequence.

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