The Pound Sterling Outlook: Gains Against the Euro Likely Say TD Securities Who See Positive Conditions Ahead for GBP

However, this weakness may be short-lived say analysts at TD Securities who forecast the GBP to be one of the better performing currencies in coming months. The euro is particularly at risk to losses.

For reference, at the weekend the following FX levels are witnessed:

1. The pound to euro exchange rate (GBP/EUR) is at 1.2646.
2. The pound to dollar exchange rate (GBP/USD) is 0.07 higher at 1.6600.
3. The pound to Australian dollar (GBP/AUD) is 0.07 pct lower at 1.7792.
4. The pound to Canadian dollar (GBP/CAD) is 0.01 pct lower at 1.8064.

PS: All the above are spot market quotes, your bank will affix a discretionary spread to the figures. In order to get as close to the market rate we suggest consulting an independent FX provider, the delivery of up to 5% more currency is possible in many instances.

Sterling's Positive Outlook Hit by Uncertainty Over Bank of England Policy

When will the Bank of England raise interest rates?

This question continues to pose a conundrum to currency market watchers with an interest in the GBP.

Indeed, market expectations regarding a BoE tightening have whipsawed in the past couple of months.

BoE Governor Mark Carney warned in June that rate hikes may come sooner than expected but the July CPI data disappointed on the downside only for the August BoE minutes to reveal a 7-2 vote for keeping rates on hold when the market expected no dissenters.

Nevertheless, Shaun Osborne at TD Securities believes the outlook for the pound sterling exchange rate complex remains bullish, and gains against the euro look particularly likely:

"We expect the GBP to outperform some of its G-10 peers.

"We continue to feel that the UK recovery is strong enough to support an initial BoE rate hike fairly early in 2015 – ahead of the Fed and in contrast to the accommodative policies that we expect to be pursued on the Continent and in Japan.

"The contrast should support the GBP on the crosses in particular. We think EURGBP's recent push higher has taken the cross back to attractive levels for sellers."

For Now Though, Sterling is in 'Wait and See' Mode

There were was again no clear driver in sterling trading as the focus on global markets was on Ukraine rather than on country specific news.

European markets shifted to risk‐off mode, dafe haven bonds attracted a new strong bid, equities nosedived and the euro was also sold.

The CBI distributive trades (published at noon ) were better than expected, but the report had not distinct lasting impact on sterling trading.

According to Piet Lammens at KBC Markets:

"However, at that time (midday) the market was flooded with headlines on the developments at the Russian/Ukraine border. EUR/GBP initially hovered in the 0.7955/75 area but dropped below the 0.7950 mark as the euro was sold across the board on Ukraine.

"That said, the move was limited EUR/GBP is trading in the 0.7940/45 area at the moment of writing. Cable retried to move north of 1.66 this morning."