Euro Exchange Rate Forecast: EUR to resume upward trend

• Update, 5th September: We suspect forecasters will start lowering their forecasts and expectations for the Euro in the near future - the EUR is likely to struggle as the likes of the GBP and USD continue to benefit from strong economic outperformance. Check Here for the Best Euro Exchange Rates Based on Today's Current Spot Market Rate.
• The Pound to Euro exchange rate is 0.2 pct up on a day-to-day basis; at 10:22 in London GBP/EUR is seen at 1.1471. Still below the 1.15 peak seen following yesterday's Manufacturing PMI release.
• The Euro to Pound exchange rate is thus at 0.8717.

Be aware that the above quotes are taken from the wholesale spot markets, your bank will affix their own discretionary spreads to the figures. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you more currency. Please find out more here.

Near-term outlook for the Euro / Pound exchange rate

Technical analysts at Trading Central tell clients that they are backing the Euro to advance against the British pound from here:

"Long positions above 0.87 with targets @ 0.8745 & 0.877 in extension.

However, should EUR/GBP break below 0.87 look for further downside with 0.8675 & 0.8655 as targets.

Essentially, Trading Central are forecasting the pair to rebound in coming sessions. (Remember we are talking about EUR/GBP here, thus this is a sterling-negative assessment).

The relentless rise of the Euro

The medium-term outlook for EUR/GBP favours the EUR.

Luc Luyet at MIG Bank says:

"EUR/GBP saw a setback within its recent rising trend yesterday. This is however being undone with the relentless rise towards 0.8815 still firmly in place. As mentioned yesterday, should a retest of this level take place, strong resistance would be anticipated nearby."

Pound sterling gets no relief from persistently positive economic readings

The decline in the British Pound to Euro exchange rate comes against a backdrop of positive economic data releases.

British construction activity jumped sharply in July to hit its highest level in over three years, led by a surge in residential building, a survey of purchasing managers showed on Friday.

The Markit/CIPS construction PMI leapt to 57.0 last month, up from 51.0 in June and its strongest level since June 2010.

Forecasters pencilled in a mere rise of 51.6.

Yesterday we saw another strong economic release with the Manufacturing PMI which came in at 54.6 vs 52.8 expected.

This tells us one thing - for the GBP/EUR the only hope of further gains rest with the Bank of England.

The 7th of August brings us the third Quarterly Inflation Report for 2013 from the Bank of England.

Currency market players are clearly pricing in an accommodative policy at the Bank; when we talk about accommodative policy we talk about sterling-negative measures to boost the UK economy.

Sterling bulls will be hoping that the recent economic revival will see the Bank ease back on any aggressive plans.

All will be revealed on the 7th.