Best Pound Euro Exchange Rate in Years Still in Play, But Where Will the GBP Go Next?

Nevertheless, those looking to buy the euro with their GBP should note that we are still seeing the best rate of exchange for the GBP/EUR since August 2012.

At the time of writing the pound to euro is at 1.2641.

(Note: If you are hoping for a better exchange rate then don't hesitate and don't leave it to chance, ensure your currency provider has the relevant stop-losses in place. Furthermore, by using an independent provider you could be able to execute your currency needs at rates that can be up to 5% more beneficial than the rates offered by your bank.

If you are holding out for a better rate set up an order that will trigger as soon as your desired level is achieved, find out more.)

Can we expect further pound sterling gains against the euro?

For those currency market watchers hoping for higher rates we would urge patience in the near-term.

As noted by Piet Lammens at KBC Markets, "sterling had a strong run against the euro over the previous days and some consolidation might be on the cards.

"However, the downside momentum in EUR/USD probably keeps the topside in EUR/GBP well protected." i.e Any rallies in the euro are likely to be short-lived.

Also backing the view that the British pound is due to take a break from rally-mode are Lloyds Bank Research:

"While there are other reasons why some may see a need for higher interest rates (e.g. housing market strength) these are unlikely to be enough to gain majority support.

"So for now GBP strength may need to pause until there is some evidence of genuine inflation pressure. Momentum seems to be flagging both against the USD and EUR."

Nevertheless, from a longer-term perspective it is worth noting that the decline in the euro appears to be intact for now.

Lammens comments further:

"The standing EUR/GBP downtrend remains intact and the day‐to‐day momentum turned again sterling positive after the UK inflation report. We maintain a sell‐on-upticks bias."