Pound Euro Exchange Rate Forecast to Stage Recovery GBP EUR

Modified: Tuesday, 5 May 2015 15:55 BST - Written by John Cameron

STORY LINK Pound Euro Exchange Rate Forecast to Stage Recovery GBP EUR

Thin trading volumes during yesterday’s session didn’t stop the Pound sterling (currency:GBP) enduring significant price action. The Pound euro exchange rate climbed edged up from an intraday low of 1.3518 to briefly break back above the 1.3600 threshold. However, Sterling fared less well against the US Dollar (currency:USD), with the GBP USD exchange rate falling back to touch as low as 1.5091.

The move for these two Pound pairs was partly linked – although the May bank holiday in large parts of Western Europe brought little in the way of trading, it was a completely different story in the US, with Wall Street opening up for a normal day’s business. America also provided one of the few data releases of note on the day, in the form of March’s Factory Orders data. The result beat expectations, pointing to a monthly increase of 2.1% and providing some encouragement for investors holding Dollar-denominated assets that the sharp slow-down in US economic growth during the first three months of this year was nothing more than a blip. The pair slumped to a multi-year low of 1.4566 GBP USD last month but strongly rejected this nadir to push back up into the middle part of the 1.5000 – 1.6000 range last week.

Meanwhile, there was one economic statistic of note from the euroland yesterday – the Sentix Investor Confidence survey showed only a slight dip from last month, suggesting that economic participants in mainland Europe continue to be reassured by the presence of the European Central Bank’s large-scale Quantitative Easing programme.

The upshot of yesterday’s trading saw the world’s premier currency pair – the euro US Dollar exchange rate - shed a cent, trading down from 1.1224 to 1.1124. The move suggests that investors believe that the market move against the Buck which followed last week’s dire Q1 US GDP numbers has now worked its way out. The next set of American growth data, out in three months’ time, is likely to show a major dead cat bounce for the American economy. The data will be published at a time when the euroland may be in the full throes of a full-blown Greek debt crisis, leading many analysts to forecast that the EUR USD exchange rate will make a run at parity before the Summer is out. Such a relative weakening of the shared currency would allow the GBP EUR exchange rate to push on towards the 1.5000 threshold, providing this week’s British General election yields a workable government for the UK.

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: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts