Wednesday Forecast to be Pivotal for Pound Sterling vs Euro and US Dollar

Modified: Monday, 16 March 2015 16:22 BST - Written by John Cameron

STORY LINK Wednesday Forecast to be Pivotal for Pound Sterling vs Euro and US Dollar

Pound Sterling to Euro Exchange Rate Falls Today as Euro Technically Oversold

The EURO (currency:EUR) has enjoyed a brief period of respite during this morning’s session in the currency market.

The shift back into euro-denominated assets was partly technical in nature – (the single currency has been heavily sold-off during recent weeks, leaving euro-pairs susceptible to profit-taking from speculators) – but there was one prominent fundamental factor which provided it with further fuel.

Italian Central Banker Helps Euro Exchange Rate

Italy’s central bank Governor may not be a well-known figure on the international stage, but comments from Ignazio Visco during early trading today have helped the single currency.

The Italian money man stated earlier that he was worried at the speed with which the shared currency’s value had declined following the start of the European Central Bank’s controversial Quantitative Easing programme a week ago.

Visco’s comments carried additional weight thanks to his standing as a member of the ECB’s Governing Council.

Visco’s fears that QE might have too pronounced an effect on the eurozone’s bonds looks likely to cause a mini-blip of support for the single currency in the very short term, however the ECB remains fully committed to €60bn worth of sovereign debt purchase for the next 18 months, so whatever Visco’s concerns may be, there is little which the euroland reserve bank can do about it.

US Dollar Subdued

Elsewhere, the euro to Pound Sterling exchange rate has received another push in the right direction by the fact that support for the US Dollar (currency:USD) has generally softened since the global markets re-opened last night.

The Buck has come a long way in a relatively short time, so again it was perhaps due a technical retracement; however today’s flaccid support for the Greenback looks like a case of market participants sitting on their hands ahead of this week’s all-important US Federal Reserve policy announcement, which is due in just over 48hrs.

Any hint from the US central bank that a rate hike is on its way will be likely to send the euro US Dollar exchange rate tumbling down towards parity, taking the euro to Pound Sterling rate lower with it.

Analysts therefore forecast that Wednesday will be pivotal for the Pound, Euro and US Dollar in the short-to-medium term.

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