Euro Pound: Losses Forecast for EUR/GBP Exchange Rate Despite ECB Draghi?s Words

December 4, 2014 - Written by John Cameron

STORY LINK Euro Pound: Losses Forecast for EUR/GBP Exchange Rate Despite ECB Draghi?s Words

Currency News UK presents our Euro to Pound exchange rate forecast

The main event of the day in the global currency markets came earlier on when the European Central Bank (ECB) President Mario Draghi took to the stage to face the assembled gentlemen of the press for his latest monthly Questions and Answers session.

The Pound to Australian Dollar exchange rate today is converting +0.06 per cent higher at 1.87018 GBP/AUD.
The Pound to Canadian Dollar conversion rate is +0.07 pct higher at 1.78462 GBP/CAD.
The Pound to Euro exchange rate converts -0.63 per cent lower at 1 GBP is 1.26622 EUR.
The Euro to Pound exchange rate is +0.64 pct higher with a conversion rate of 1 EUR equals 0.78975 GBP.
The Pound to US Dollar exchange rate today is converting -0.12 per cent lower at 1.56724 GBP/USD.

Full-Tilt QE Delayed by ECB

For once, the top man at the ECB’s words served to galvanise support for the single currency, sending the Pound Sterling to euro exchange rate down from an intraday high of 1.2753 GBP/EUR to a relatively lowly 1.2626 a short time ago.

The improvement for the euroland’s unit followed Draghi’s assertion that his Bank’s board members will re-assess whether their current policy stance is appropriate during the first quarter of next year.

Some analysts had suggested that today might be the day that the ECB might announce that it is launching a bout of all-out Quantitative Easing involving the bulk purchase of regional sovereign debt.

The relief amongst euro-holders following these comments was palpable, but with most analysts believing that any policy alteration from the ECB would come early next year, the move may yet prove to be something and nothing.

Analysts Still See Risks for Euro Exchange Rate

Peter Kinsella observed following Draghi’s statement that, ‘the euro is selling off because Draghi was not dovish enough for the market and short-covering followed.

He suggested further stimulus won’t happen before March.

The market had hoped for something sooner than that.’ Ian Stannard of Morgan Stanley backed up this sentiment, stating earlier that, ‘the ECB statement is likely to be seen as less dovish than the heightened market expectations.

The message regarding the potential for further measures does not appear to be as strong as the market had been expecting, but the statement specified that the ECB was set to reassess stimulus measures early next year. We remain bearish the euro medium term.’

Oil Price Drop Adds to EUR/GBP Pressure

So, analysts continue to forecast that the Pound Sterling euro exchange rate GBP EUR will climb through the 1.3000 threshold during coming months – today’s words from Draghi have, more than likely, simply delayed the inevitable.

Today’s move to below the $70 per barrel level for the price of a barrel of crude oil appear to increase the threat of deflation for the eurozone economy, making more QE and a move against the single currency more likely.

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