Pound To Euro Exchange Rate Forecast: Sterling Slides On OECD Post-Brexit Concerns

Currency exchange markets find the British pound to euro exchange rate lower on the day after the latest Brexit concerns cripple GBP.

• The British Pound to Euro exchange rate today (28-11-16, FX markets resumed): -0.22pct lower on the day at 1 GBP = 1.17378 EUR.
• The Euro to Pound exchange rate today: +0.22% higher at 0.85195.
• The Euro to Dollar exchange rate today: -0.34% lower on the day at 1 EUR = 1.05733 USD.
• The Pound to Dollar exchange rate today: -0.61% lower at 1 GBP = 1.24035 USD.
• GBP/EUR, GBP/USD conversions slide as Malta's PM warns UK on Brexit terms.
• British Pound forecast: Sterling-Dollar range vulnerable to EUR/USD market correction.

While GBP EUR was able to hold away from its daily lows due to European Central Bank (ECB) jitters, the sterling-euro pair still fell from the week’s opening levels.

At a speech on Monday, ECB President Mario Draghi once again set out a case for more fiscal stimulus in Eurozone nations, stating that the ECB’s policies could not create growth alone.

GBP/EUR opened the week with a negative bias, but remains 'trapped in a well-defined bear channel' say Lloyds in a brief on Monday 28th November.

In the latest Brexit news, the GBP/EUR and GBP/USD are being dragged lower after it was reported that the UK government is facing a fresh legal challenge on single market membership.

The British pound to euro conversion closed off trading last Friday on a low note, having fallen to a rate of 1.17 in the wake of widespread fears about future Brexit negotiations.

The concerns focused on single market access, which the UK Government has been hoping to keep while limiting immigration into the UK.

, however, declaring that the EU was not bluffing when it stated that the two states were linked, not selective options.

Latest Pound/Euro Exchange Rates

Euro to Pound Sterling (EUR/GBP) Exchange Rate to See Substantial Downside

"In only a few weeks the euro could once again come under pressure from increased political uncertainty after a period of stability" notes Richard Falkenhall of SEB in a brief to clients last week.

"Conversely, the GBP has suffered from a post-Brexit frenzy since the vote in June."

"Despite recovering slightly in recent weeks, sterling's risk premium still discounts a high probability of a hard Brexit."

"Given the present EUR/GBP exchange rate we see substantial downside potential if a Eurozone political event triggers an increased risk premium for the euro, a development that might actually reduce the political risks attached to GBP."

"From a valuation perspective levels around 0.75 should be long-term sustainable."

This equates to a pound to euro exchange rate value of 1.33333.

However, analysts at Deutsche Bank are bearish on the pound to euro rate in the near-term:

"GBP has recovered some ground following the High Court Article 50 judgment against the government but our forecasts remain bearish for the pound against both the dollar and the euro" saya Alan Ruskin, FX Strategist at Deutsche Bank Markets Research.

"Even if the Supreme Court validates the High Court’s ruling our baseline is that a one-line bill will be passed through parliament in Q1 bringing the Brexit timetable back on track. We expect the market to re-focus on the implications of hard Brexit with the absence of fiscal stimulus, the back-loaded impact of a weak GBP on household finances, and very negative current account dynamics all weighing on GBP over the course of next year."

British Pound (GBP) Predicted to Rise Versus Euro (EUR) if GfK Confidence Score Pulls Through

The main focus for GBP/EUR watchers this week will be on the later days, with Wednesday to Friday bringing GfK consumer confidence stats and manufacturing and construction PMIs, respectively.

The confidence figure is expected to be the highest impact, with present predictions being for a slight improvement from -3 to -1; should a positive result occur, the Pound may well rally against the Euro on the news.

Thursday’s manufacturing PMI is set to move closer to contraction from 54.3 to 53.8, while Friday’s construction PMI is forecast to rise marginally from 52.6 to 52.8.

Euro (EUR) Exchange Rates in High Demand Overall on Close of Friday’s Trading Session

While Euro exchange rate investors were dealt a mixed hand over Friday’s trading session when it came to Eurozone data last week, the EUR GBP pairing still closed favourably.

The major announcements came from Italy, where industrial orders and sales as well as retail sales fell in September to below-forecast figures.

Optimism in the Euro remained high, however, partly because demand for the US Dollar, a strong rival, was relatively low across all of Friday.

High Volatility Likely on Confidence and Unemployment Stats

The coming week is set to be saturated with major Eurozone data, starting off with Tuesday’s November Eurozone-wide confidence figures. Unfortunately for EUR investors, potentially damaging drops have been forecast in most cases.

Closing off Tuesday’s news will be German inflation rate stats for the same month; these could boost EUR demand as they are expected to rise on the year.

The other big news of the week will come later on, covering Wednesday’s German and Thursday’s Eurozone unemployment rate stats for November and October. Respectively, stagnation at 6% and 10% is expected.

Warning of Negative Trump Impacts on Eurozone from ECB Official

One of the influencers on the Euro last week was speculation about how a Trump Presidency could have an impact on the Eurozone. Among those giving their opinion was European Central Bank (ECB) official Vitor Constancio, who estimated that;

‘If bond yields go up because there is the prospect suddenly that growth and inflation increase […] then that’s a positive development. The risk is, of course, that this situation would be more true in the US and less true in Europe and other parts of the world’.

GBP & EUR Economic Events in This week's Forex Calendar

The GBP-impacting events in the next seven days include the BOE Financial Stability Report (Source), the FPC Statement, the Net Lending to Individuals, the M4 Money Supply and the Mortgage Approvals.

The EUR-impacting events in the next seven days include the M3 Money Supply (Source), the Private Loans, the German Prelim CPI (Source), the French Prelim CPI (Source), the Spanish Flash CPI (Source), the German Unemployment Change (Source), the German Retail Sales, the CPI Flash Estimate (Source) and the Core CPI Flash Estimate.

Euro to Dollar Exchange Rate Forecast

Lloyds are on 'high alert' for a potential slide in the EUR/USD exchange rate towards parity:

"EURUSD has reached key 1.0525-1.0450 support, with divergence between price and momentum studies warning a broader correction is possible."

"Given the impending European political event risk (French elections, Italian referendum) the pair is unlikely to race away to the topside, so we are focussed on 1.0650 intra-day resistance."

"A move through there would add confirmation, with 1.07-1.0750 more important resistance above."

"Ultimately we have been open to the entire contracting range since March 2015 as a consolidation within the long-term bear trend."

"We are therefore on high alert for a breakdown through the key 1.0450 lows, opening a potential move towards parity, with the 1.0250 region support ahead of that."

The GBP/EUR Crumbles on Brexit Fears

The Pound is expected to fare poorly against the Euro in the future, owing to the latest fears about Brexit.

The Pound has crumbled against the Euro today, falling to a rate of around 1.16 in the pairing.

Amid ongoing concerns about whether the Government can trigger Article 50 without parliamentary approval, a new issue has emerged concerning single market access.

In this case, the issue has been that the UK may be forced to remain in the single market after leaving the EU, which would effectively force the adoption of looser immigration rules to EU citizens.