GBP/EUR Exchange Rate Forecast: GBP vs EUR Outlook for the Week starting 24th March
- Written by: Gary Howes
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The pound to euro exchange rate remains stuck in a band centred around the mid 1.1950's and it seems there is very little that has the power to propel the UK unit higher at this stage.
After a great start to the new year the GBP-EUR has had a poor March.
However, the start of a new week sees the pound to euro exchange rate traded higher on a day-to-day basis having achieved 1.1970. On Tuesday though the pair is seen at the lower end of the range at 1.1920. The release of CPI data on Tuesday will be critical to near-term direction.
The rate remains below the key resistance level of 1.20 and will likely stay anchored to the mid 1.1950's in our opinion.
Note that all quotes here are mid-market rates. Your bank will widen the spread when delivering you a retail transfer/payment rate. However, an independent currency provider will guarantee to get you closer to the market rate than your bank would. Please find out more here.
The sterling euro forecast
Analyst Bill McNamara at Charles Stanley cautions those hoping for better GBP exchange rates that the GBP-EUR is unlikely to recover anytime soon:
"Sterling/Euro (€1.1954) – having slipped back through its short-term uptrend the UK currency has lately been regrouping and there is, as yet, little sign that it is ready to start tracking higher again.
"With that in mind we are probably going to need to keep an eye on the recent closing low, at 1.191, as that has come to represent a support level of sorts. (A push back up through 1.20 would, on the other hand, imply that a bottom is now in place)."
Mirroring this viewpoint is the team at Caxton FX:
"We doubt sterling has enough momentum to push to 1.20 but we do expect some slightly higher levels during trading."
On the prospects for the GBP to USD, Charles Stanley say:
"The pound recently pushed above a long-standing impediment at 1.664 but that the sellers returned shortly thereafter and drove it back below this key level. It might be a while before it is in a position to break back above that five-year resistance level."
However, fundamental opinion often runs contrary to what the charts tell us, this is certainly the case with the viewpoint held at Lloyds Banking Group:
"GBP has been on the back foot for the last couple of weeks, falling against both the USD and the EUR is spite of still relatively strong UK data, and while GBP was off its lows against the EUR on Friday, this relative GBP weakness has undermined sentiment for now.
"The best explanation rationale for GBP declines is probably simply an unwinding of excessive positioning, but the fact that both the US and Eurozone produced better current account data in the last week highlights this as a weakness in the UK, and this Thursday’s data will consequently be of more than usual interest.
"Even so, the cyclical indicators still support relative UK outperformance, and suggest potential for GBP gains against the EUR and CHF if market risk appetite improves and the UK data continues to suggest that UK rates will keep pace with the US."
