Euro to British Pound (EUR/GBP) Exchange Rate Forecast to Enter Downward Spiral
The Euro (EUR) is currently trading against the British Pound (GBP) at 0.7909 on Friday, following speculation that the Euro will be stuck in a downward spiral against Sterling for the foreseeable future.
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The Euro to Pound exchange rate has seen highs so far this session of up to 0.7915 and sunk to lows of 0.7899.
Conversely the Single Currency to US Dollar (USD) exchange rate is presently trading at 1.3529. The Euro has traded at its highest point today against the ‘Buck’ at 1.3534, and lows of 1.3511.
However the Euro looks set to decline against the Pound, with instability in the Eurozone and a string of disappointing data. The Euro seems unlikely to be able to compete with the bullish Pound that’s been gaining against other majors.
An expert in the field, Steve Barrow, has commented: ‘The decline we’ve seen in Euro-Sterling since Carney made his comments about a potential rate hike have probably been a little more significant than we’ve seen in the past, without any consolidation or correction. That’s the only thing that makes me wary.’
This speculation has taken pressure off the Pound to US Dollar (USD) exchange rate, which should remain firm, but is unexpected to make further gains.
The Euro has weakened 5% against Sterling this year, potentially en-route to see the biggest annual loss against the Pound since 2009.
A representative for the Bank of America, MacNeil Curry, has suggested: ‘If you look at Euro-Sterling, it’s a pretty textbook downtrend. Cable’s [GBP/USD] has been a pretty sizable uptrend for the past year and a half, but there’s a whole host of signs that say—from the perspective of momentum pattern recognition as well as a whole bunch of resistance areas—that further gains should be limited.’
With the UK economy strengthening and the Pound gaining 12.4% against the US Dollar in the past year, speculation is rife in the currency world that the UK could raise interest rates before any other developed country, in the aftermath of the great recession that began in 2009.
The threat of deflation is currently prominent within the Eurozone, and economists have recently suggested that the European Central Bank (ECB) isn’t helping the Eurozone recovery as much as they could.
Barclays stated: ‘We believe circumstances are fast increasing the risks that the ECB will be forced to launch further unconventional measures.’
The Euro to Pound exchange rate could see fluctuations on Tuesday with the release of Public Finances and Public Sector Net Borrowing data published.
The Euro however will see its most influential day on Thursday when Manufacturing, Services, and Composite PMI data will be revealed.