Pound to Euro | Pound Euro Exchange Rate News and Insights

Pound to euro exchange rates (GBPEUR) to receive guidance from pound dollar as UK calendar thins out

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Category: Pound to Euro

Published on Friday, 27 January 2012 12:36

Written by Sam Coventry

An exchange rate forecast for the final week of January sees a strengthening US dollar. EURGBP should hold the line above 0.8350.

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The pound to euro exchange rate will not have a busy UK economic calendar to source direction from next week.

The final week of January is forecasted to see the US dollar strengthening, and the pound euro exchange rate is likely to take direction from the pound US dollar pair.

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"Cable (GBPUSD)  received a fresh boost from the retreating USD, but UK GDP for 4Q11 proved weak with a 0.2% fall qoq, while the latest BoE minutes called for more bond buying and the need for new liquidity injections was also reiterated by Governor King," says Armin Mekelburg at UniCredit Bank.

According to Mekelburg an extension of the Asset Purchase Program (APP) by at least GBP 50bn at the MPC meeting on 9 February is fully priced in at this stage.

Take a look at the levels of quantitative easing forecasted by Standard Charterd… now this kind of intervention would be interesting!)

"Thus, cable will again remain heavily dependent for now on postFed USD behavior, as the UK data calendar is not heavy with just the PMI Surveys on 1 and 3 February, both seen firm. We suggest waiting for the BoE meeting before going cable short again, also because the break of 1.57 may spark fresh buying towards 1.58 in the meantime. EURGBP should hold the line above 0.8350, but a break above 0.84-0.8450 may be tricky," says Mekelburg.

Also on the radar next week is a resolution to the private sector negotiations on losses to Greek debt.

According to UniCredit, we should not expect any major progress: "For as long as debt-burdened Greece is unable to make progress with its budget consolidation process and remains far from the next bail-out package, even the announcement of long-term solutions at next Monday's EU summit may not be rewarded by investors, as was already the case at the beginning of December 2011."