Euro Forecast

The big question remains - how low can the British Pound go - and we have another insight for our readers to consider.

The GBP is said to be 10% undervalued on a trade-weighted basis - allowing for increased prospects for a strong recovery.

Sterling has taken a hell of a pounding on the ropes of late, however, both technically and fundamentally there are signs a recovery could be on the horizon, and an aged fighter’s bleary, bloodshot, half-opening eye is signalling there is still life in the old veteran yet.

 The pair continues to decline and although it has hit our favoured target at 1.1600,. we see potential for more weakness down to 1.1400.

The British Pound should reach 1.19 by the end of 2016, ahead of a move towards 1.30 in 2017 say Lloyds Bank.

Bank of England’s effectiveness in driving down of bond yields is seen as the key to a weaker Pound Sterling against the Euro say Morgan Stanley.

Strategists at Intesa Sanpaolo have lowered their GBP forecasts in the wake of the Bank of England’s August policy event.

The British Pound has failed to crack to decisively lower levels in the wake of the Bank of England’s fresh policy stimulus.

The decline in Pound Sterling is not yet over according to new research from one of Europe’s largest investment banks.

The EUR/GBP pair is rising after breaking out of a triangle formation; it may well reach the same level as the 0.8627 July highs.

The British Pound is a Sell ahead of the Bank of England’s Super Thursday event say JP Morgan noting markets are yet to fully price the impact of policy divergence into the GBP to EUR conversion.

The risk is for the pound to weaken in the week ahead as the Bank of England (BOE) meets to launch its summer stimulus programme.

Despite the pair’s strong rebound on Friday following downbeat Q2 US growth data, the pair is still in a short-term down-trend from a technical point of view.

Strategists at Morgan Stanley have told clients that they continue to see value in selling the British Pound against both the US Dollar and Euro.

Consolidation is the watch-word when it comes to the GBP to EUR conversion’s outlook, but we hear there remains an overwhelming bias for further declines.

Quarterly foreign exchange forecasts out of BMO Capital following the EU referendum show that the GBP’s recovery back above 1.30 against the EUR could  will only occur in twelve months.

Ahead of the all-important US Federal Reserve policy decision and communication we note that the EUR/USD is trading with a positive tone.

The English and European central banks were thought to be in the same boat when it came to the after-effects of Brexit, but recent data is starting to show a growing difference.

Forecaster’s at JP Morgan see EUR/GBP reaching 0.89 by year end, and GBP/USD bottoming at 1.28 in September.

Tech & fund outlook for the GBP/EUR pair in the week ahead.