Pound to Euro Forecast: EUR Weakness Brings Best GBP Exchange Rate in 6 Years

January 13, 2015 - Written by John Cameron

STORY LINK Pound to Euro Forecast: EUR Weakness Brings Best GBP Exchange Rate in 6 Years

Today's Pound Sterling to Euro Exchange Rate Report and GBP/EUR Forex Analysis for 2015

The Pound Sterling (currency:GBP) has pushed ahead to within touching distance of a fresh 6-year high against the euro (currency:EUR) during this afternoon’s trading session.

GBP EUR Threatens 1.2900

The forward move to close to the 1.2900 threshold for GBP EUR was somewhat counterintuitive in nature following the publication of UK inflation numbers for December this morning which showed a larger than anticipated fall-off in the pace of domestic price rises.

Ordinarily, such a release would see the Pound lose ground against the other sixteen most actively traded global currencies, but these are far from ordinary times for the single currency.

ECB Sovereign Purchases Forecast

The euro faces two pronounced threats during the second half of this month.

The first of these on the horizon is next week’s European Central Bank (ECB) monetary policy announcement.

It appears that investors are moving to factor-in the announcement of a €500bn sovereign debt purchase scheme from the ECB – a decision which most analysts agree would weaken the single currency significantly. D-Day arrives a week on Thursday for investors holding euro-denominated assets.

Greece Fears Ease

Meanwhile, concerns regarding the second potential threat to the single currency during the second half of January are easing somewhat.

The announcement that the debt-troubled Hellenic state would be facing a General Election came during the final week of last year and triggered instant panic amongst market participants.

However, conciliatory words from eurozone policymakers suggesting that they would work together with any party or coalition of parties which gained power in Greece has served to calm frayed nerves, causing the yield on Greek bonds to drop back over the past 48hrs.

Meanwhile, the ASE Index, Athens’ benchmark stock index, has posted gains of over 6.0% since the weekend, suggesting that recent fears have been overdone.

Pound to Euro Exchange Rate Gains Forecast

Vassilis Patikis of Piraeus Bank partly acquiesced when he stated earlier that, ‘the strong two-day bounce is more of a technical rebound than anything changing.

The market may be hoping that even if the government changes, it won’t be as hostile to European agreements as it has indicated.

When you consider political risk, ‘dropping too far’ is very hard to quantify.’

Investors don’t appear completely convinced by this and further gains are forecast for GBP EUR.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts