Pound to Euro Near-Term Forecast Improves on US CPI; GBP EUR Climbs

October 20, 2014 - Written by John Cameron

STORY LINK Pound to Euro Near-Term Forecast Improves on US CPI; GBP EUR Climbs

More Bad News For The Euro (EUR) exchange rate vs the British Pound Sterling (GBP)

There was further bad news for the euro (currency:EUR) at the end of last week following the publication of the latest set of weekly data from the Commodity Futures Trading Commission (CFTC) on Friday.

The closely-monitored figures reveal the number of positive bets by speculators versus the volume of negative wagers on each of the major global currencies and they uncovered further cause for concern for investors holding the single currency.

During the week of the 14th October, institutional investors held 155,342 more ‘short’ positions on the euro than they did ‘long’ positions.

During the previous week, only 146,212 of the same speculators had been ‘net short’ the eurozone unit.

Today's EUR rates:

The Pound to Euro exchange rate converts +0.05 per cent higher at 1 GBP is 1.26291 EUR.
The US Dollar to Euro exchange rate is -0.42 pct lower with a conversion rate of 1 USD equals 0.78118 EUR.
The Swiss Franc to Euro conversion rate is +0.04 pct higher at 0.82860 CHF/EUR.
The Canadian Dollar to Euro exchange rate today is converting -0.38 per cent lower at 0.69219 CAD/EUR.
The Hong Kong Dollar to Euro conversion rate is -0.43 pct lower at 0.10070 HKD/EUR.

Quantitative Easing On The Cards From ECB

The move against the euro suggests that market participants still believe that the European Central Bank will be starting an all-out Quantitative Easing programme sooner rather than later.

The eurozone’s reserve bank has up to this point avoided purchasing sovereign debt as part of its asset purchase programme, but with regional inflation dropping to an annualised 0.3% during the past month, a move to further loosen monetary policy now looks to be highly likely, perhaps even this side of Christmas.

The one stumbling block in the ECB’s apparent grand plan is opposition from Germany; however, the resolve of the euro area’s number one economic power will be severely tested if next month’s eurozone inflation figures for October show at or below 0.0%.

Pound to Euro Exchange Rate Edges Higher

The renewed shift out of euro-denominated assets has seen the Pound vs euro rate climb to as high as 1.2649 earlier today.

The pair had been languishing in the 1.2400s last week following the publication of a highly disappointing set of UK inflation numbers.

The CFTC data of last week also revealed that the number of net short Sterling contracts had fallen from 1,075 the previous week to -2,837 last week, suggesting that investors were less keen on holding the Pound following the price rise numbers.

Sterling-Positive Data

Elsewhere, there was some good news for the Pound today after the publication of economic statistics pointing to an increase in the levels of consumer confidence in the domestic economy and a renewed move higher for British price rises this month.

Jeremy Stretch of Canadian Imperial Bank of Commerce observed that the Pound was enjoying, ‘a short-term resurgence. It’s a slightly more positive risk environment and I guess the underlying theme is still going to be data-driven.’

However, he went on to urge caution, stating that he did not, ‘see the justification for a squeeze higher to $1.62 or anything of that magnitude,’ for the GBP USD exchange rate.

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