Foreign exchange market reaction saw the British pound to euro exchange rate slide sharply on Super Thursday. We examine the latest euro-related fx forecasts targeting the sterling and the US dollar in the short, medium and long-term GBP/EUR forex outlooks.
- The Pound to Euro exchange rate today: 1.17916.
- The Euro to Pound exchange rate today: 0.84806.
GBP/EUR once again failed to stay above the key level of 1.18 on Friday afternoon, as a rush in appeal of the US Dollar undermined any morning attempts for Sterling to recover.
Investors were previously toying with the idea of selling short positions and buying back Sterling from its cheapest levels, but a shift in attention towards USD following a surprisingly solid Non-Farm Payrolls report. Investors flooded towards the ‘Greenback’ leaving the Pound limp.
The appeal of the euro was sharply dented in the wake of an unexpectedly large contraction in German Factory Orders, which declined -3.1% on the year in June.
As this pointed towards a greater slowdown within the Eurozone’s powerhouse economy this allowed the GBP/EUR exchange rate to trend higher, particularly as the reaction the BoE’s decision began to fade.
GBP/EUR fell further into the level of 1.17 on Thursday afternoon, instantly shedding its weekly gains and trending near the week’s lowest levels as investors continued to sell off the British currency following the Bank of England’s UK easing measures and gloomy outlook.
Alongside a cut to growth forecasts, BoE Governor Mark Carney also announced that there was more room for further action if it was needed at a later date. He did, however, attempt to reassure markets that Thursday’s stimulus package would help to stave off a potential recession.
Market consensus was proven right on Thursday when the BoE’s Monetary Policy Committee (MPC) voted unanimously to cut interest rates to a new record low of 0.25%.
An expansion of quantitative easing was also announced, although it was passed by a split vote, leading the GBP/EUR exchange rate to slide afresh.
Sterling has slumped today, with GBP/EUR falling towards 1.18, after the Bank of England announced an array of policy changes to stimulate the UK economy.
Sterling opened today in an undesirable state, with the pound to euro exchange rate fluctuating ahead of the Bank of England's Super Thursday event.
This softened state has undeniably been caused by post-Brexit investor uncertainty, ahead of what may be a historic Bank of England (BoE) interest rate cut after 7 years of inactivity.
Forecasts have largely been for a rate cut, with the precise distribution of the Monetary Policy Committee (MPC) expected to be 6 to 3 in favour of a cut from 0.5% to 0.25%.
Latest Pound/Euro Exchange Rates
On Tuesday the Pound to British Pound exchange rate (GBP/GBP) converts at
1
Today finds the pound to pound spot exchange rate priced at 1.
The pound conversion rate (against us dollar) is quoted at 1.256 USD/GBP.
The live inter-bank GBP-CAD spot rate is quoted as 1.716 today.
The live inter-bank GBP-CHF spot rate is quoted as 1.138 today.
Today finds the pound to australian dollar spot exchange rate priced at 1.894.
NB: the forex rates mentioned above, revised as of 7th May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
British Pound (GBP) Holds Firm vs Euro (EUR) but Could Nosedive if BoE Actually Cuts UK Interest Rate
Given the magnitude of the decision that the UK central bank is facing, it seems probable that the Pound exchange rates will crash against its rivals should the BoE cut the rate.
In the increasingly unlikely situation of no change at the current rate of 0.5%, the Pound could briefly rally; in the words of Reuters economist Jamie McGeever, speculators are ‘holding record short positions’.
How long the Pound falls for in the event of a cut can only be speculated on, though given how probable a rate cut seems at present, it is possible that any actual losses will be short-lived due to pricing-in beforehand.
Euro (EUR) Exchange Rates Perform Poorly as ECB Bulletin Points to Tough Times Ahead
The value of the Euro has been low in a majority of pairings recently, with recent domestic data out of the Eurozone only perpetuating the current state of uncertainty among investors.
In direct news, the German construction PMI for July has risen from 50.4 to 51.6, while Greece’s unemployment rate for May has remained at 23.5% against forecasts of a drop to 23%.
The recently-released European Central Bank (ECB) economic bulletin has painted a disappointing picture of the currency bloc, citing high debt and low growth as recurrent limiting factors.
German Factory Orders and Greek Trade Balance to Influence GBP/EUR, EUR/USD Exchange Rates Tomorrow
The last day of the week will bring the announcement of the German factory orders for June, which are forecast to rise significantly from 0% to 0.8% in the morning.
Following on from this will be France’s trade balance for the same month, which has little change forecast in the current deficit of -2.8bn.
Other Eurozone data to watch out for will include the Greek trade balance for June as well as Spain’s industrial production result. Greece’s trade deficit is forecast to be reduced, while Spanish production has a rise from 1% to 2.8% on the cards.
Will it be High Noon for the GBP/EUR Exchange Rate? BAM Economist Weighs In on BoE Rate Cut Odds
Although most voices have been arguing in favour of a rate cut taking place, there are still those who think the UK’s central bank will hold fire for yet another month.
Among these are Baring Asset Management Head of Global Fixed Income Alan Wilde, who has said:
‘We have a new PM and Government and markets are calm. The risk today is that markets are anticipating too much in the way of immediate easing when the MPC may wish to keep some powder dry to act in the future – should circumstances demand they do so’.
Leading Euro to Pound Exchange Rate Analysis
Lloyds deliver their end-of-week EUR?GBP exchange rate analysis:
"EURGBP continues to respect its technical support and resistance levels."
"Having held the 0.8340/30 area, it subsequently moved higher yesterday, led by GBP’s post-BoE collapse."
"The rally was capped at 0.8480-0.8500, with this region tested multiple times."
"This short term 0.8330 – 0.8500 range may remain intact today, as event risk is primarily USD related."
"In the event that interim highs are broken, there is scope to gradually move towards spike highs at 0.8627."
"Should range lows give way then subsequent support levels are at 0.8305/00 and 0.8250/00."
"Long term, in conjunction with the GBPUSD view above, we believe this move to the topside is the last within the correction from the 0.70-0.69 support region."
"Above 0.87, sees next resistance in the 0.90-0.92 region."