GBP/EUR Exchange Rate (GBP/EUR): EUR Outlook Deteriorates Say Western Union
- Written by: Gary Howes
-
The pound to euro exchange rate has come under pressure during the Thursday morning trading session as the EUR is given a boost by decent Eurozone economic data, but forecasts continue to underpin sterling longer term.
The British pound to euro exchange rate (GBP/EUR) is seen trading 0.18 pct down on last night's closing level; the rate is quoted at 1.2104 at 11:21 in London.
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Driving the pound euro rate at present is the euro which has been boosted by some encouraging economic snippets out of the Eurozone today.
- Consumer Confidence (Jan) came in at -11.7, in line with expectations and improved on the previous month's -13.5.
- Economic Sentiment Indicator (Jan) came in at 100.9, below expectations at 101.0 but improved on a previous reading of 100.4.
- Industrial Confidence (Jan) read at -3.9 which was actually worse than predictions for -2.8 and last month's -3.4.
- However, it was a strong reading in the Services Sentiment (Jan) that got markets buying the euro. The reading beat expectations coming in at 2.3, last month was a mere 0.4.
Update: EUR outlook reaches tipping point. According to Jean-Pierre Dore at Western Union the euro outlook is poor. He tells us: "The euro may be coming to a tipping point as fundamental data, technical data, and European Central Bank (ECB) murmurs all point to an increasingly bearish outlook going forward. This morning’s consumer price index (CPI) data from Germany was weak and put further support behind those anticipating a dovish tone to set by the ECB next Thursday."
Meanwhile, the British pound is suffering at the hands of a lack of headline data events.
There was however some second-string data to get to grips with which were in fact not really supportive of GBP:
"Sterling continues to keep the rate above 1.21 which suggests demand for the pound hasn’t faded just yet. Spanish GDP was in line with estimates posting 0.3%q/q growth, whilst German unemployment change beat estimates. The pressure on the pound is building as M4 lending slumped. The pound will be on the back foot today and will struggle to keep the rate above 1.21.
Outlook continues to favour pound sterling
Despite today's declines it is worth remembering that GBP remains favoured owing to recent momentum and a sunnier outlook for the UK.
Below is a selection of the latest euro / pound exchange rate forecasts (EUR/GBP) gathered from the big names we follow in FX forecasting.
UBS:
"The important resistance is at 0.8349. While this holds, the cross remains vulnerable to extend its bearish trend to test support at 0.8160. A close below which would be the next bearish development."
Daily FX Research:
"Even though the EURGBP is a slower‐burning trade, the long‐term outlook remains tilted to the downside as it retains the bearish trend dating back to 2009. However, a steeper decline appears to be take shape as Mark Carney’s BoE moves away from the easing cycle. With that said, we will continue to look for a series of lower highs to sell the EURGBP, and the pair remains poised to face a pronounced decline in 2014 as the ECB prepares to implement more non‐standard measures in the coming months."
Forex.com:
"Bias higher above 0.8220 towards 0.8260 pivot initially ahead of 0.8305 highs, below may see 0.8200 & then 0.8165 prior lows next."
