GBP/EUR Rebound Back Above 1.4000 Forecast for Pound Sterling to Euro Exchange Rate

March 17, 2015 - Written by John Cameron

STORY LINK GBP/EUR Rebound Back Above 1.4000 Forecast for Pound Sterling to Euro Exchange Rate

The euro (currency:EUR) has soared against the Pound Sterling during today’s session, sending the GBP EUR exchange rate down to its lowest level since the start of last week at 1.3857 GBP/EUR a short time ago.

The day got off to a decidedly mixed start for the shared currency, with the latest German ZEW Sentiment Survey showing at well below the level anticipated by the majority of analysts.

The print of 54.8, (versus an expected 59.4), still represented a slight increase on the previous month’s showing, but even still represented a disappointment for investors holding euro-denominated assets.

Euro Exchange Rates Today:

The Pound to Euro conversion rate is -0.68 pct lower at 1.39275 GBP/EUR.
The US Dollar to Euro conversion rate is -0.17 pct lower at 0.94430 USD/EUR.
The Swiss Franc to Euro exchange rate is +0.01 pct higher with a conversion rate of 1 CHF equals 0.93871 EUR.
The Canadian Dollar to Euro conversion rate is -0.26 pct lower at 0.73841 CAD/EUR.
The Hong Kong Dollar to Euro exchange rate converts -0.14 per cent lower at 1 HKD is 0.12165 EUR.
The Australian Dollar to Euro exchange rate is -0.44 pct lower with a conversion rate of 1 AUD equals 0.71970 EUR.
The New Zealand Dollar to Euro exchange rate converts -1.1 per cent lower at 1 NZD is 0.69029 EUR.

Euro Rate Sees Relief

However, data released at the same time revealed that the core Consumer Price Index reading had unexpectedly increased from an annualised 0.6% to 0.7% last month.

This core version of the pace of price rises in the euroland is the one which the European Central Bank consistently refers to as a key indicator in its missives, so the relatively positive showing cancelled out the negative effect of the German ZEW figure.

Meanwhile, the news that France and Germany will be joining the UK in becoming founding members of the Asian Infrastructure Investment Bank (AIIB) also appears to have buoyed the euro on the day.

The move comes in spite of objections from the US, but in spite of this, market participants appear to view it as a strong positive that the euroland’s two major economies now have an established foothold in the world’s premier emerging markets.

Pound to Euro Forecast: Near Bottom of Correction?

Looking ahead, the next risk event of note for the Pound Sterling to euro exchange rate comes tomorrow evening with the latest US Federal Reserve monetary policy announcement.

With the GBP EUR exchange rate apparently nearing the bottom of a minor retracement following last week’s break to a fresh 7 ½ year high, analysts forecast that the pair is ripe for a renewed move higher.

If the Fed drops heavy hints that a tightening of its monetary policy is on its way, then look for the euro US Dollar exchange rate to tumble towards parity ads the Greenback enjoys strong buying pressure.

The attendant shift out of euros is likely to send GBP EUR higher via arbitrage funding, with leading commentators predicting that a break back above 1.4000 is likely sooner rather than later.

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