Comment: Trading in the foreign currency market is usually a problematic undertaking. Learning exactly where exchange rate will move in future looks straightforward however escapes most people. The reason behind that is that they generally don’t take into account every piece of information that is available. Simply studying indicators and forex charts only provides a small fraction of the picture. To get an edge on the forex market facts are king and understanding how to find it is essential. We look to give you the most significant reports to help you make smarter trading decisions. This article, British Pound To Euro Exchange Rate Forecast: Lloyds See Best GBP EUR Rates @ 1.21 By End-2017, 2018 provides you with the most recent information about exactly where professionals sense price will go giving you a chance to become more profitable with your forex trades
Foreign exchange markets could see the British pound to euro exchange rate climb to 1.21 by end-2017. 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 (30/11/16): +0.1pct at 1.17432, Best 24hr GBP/EUR rate 1.17525.
- The Euro to Pound exchange rate today: -0.1% at 0.85156, Best 24hr EUR/GBP rate 0.85380.
- The Euro to US Dollar exchange rate today: -0.02% at 1.06443, Best 24hr EUR/USD rate 1.06644.
- GBP/EUR, GBP/USD conversions slide at the beginning of the week on fresh Brexit legal challenge.
- British Pound forecast: Sterling-Euro range to benefit from Eurozone politcal risk.
The GBP/EUR has staged a strong comeback from the lows of 1.0809.
However, the question in everyone’s mind is, has the rally run up ahead of itself? Gajan Mahadevan, quantitative strategist at Lloyds bank believes the GBP/EUR will settle “around 1.16 at year-end”, however, for the next year, he has a target of “1.21 by end-2017.”
Latest Pound/Euro Exchange Rates
At time of writing the euro to pound exchange rate is quoted at 0.854.
FX markets see the euro vs us dollar exchange rate converting at 1.063.
Please note: the FX rates above, updated 30th Nov 2016, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
US Presidential election results not only surprised the world, they have triggered a chain of events, which have shifted the market’s focus on politics.
Politics takes center stage in Europe
Elections are always difficult to call, more so when the difference is very narrow, as was the case both with Brexit and the US Presidential elections.
Hence, the forthcoming Italian constitutional referendum on December 4, the French Presidential elections in April of next year, followed by the German elections in August/October of next year have increased uncertainty in the eurozone.
Though the polls show that Prime Minister Matteo Renzi’s proposals are likely to be defeated by 7 percentage points, analysts at Lloyds Bank believe “there is a 40% chance that the Italian populace will support Renzi’s position by voting ‘yes’, and less than a 15% probability that the referendum will lead to snap elections.”
Former French Prime Minister François Fillon has won the Republican primaries and is favored to defeat Marine Le Pen in the next year’s Presidential election, which should give relief to the euro bulls.
“The odds of non-centrist outcomes in the upcoming Italian constitutional referendum and next year’s French and German elections have narrowed significantly,” points out Mahadevan.
However, along with the political risk premium, the divergence in the monetary policies of the European Central Bank and the Bank of England has increased.
BOE is unlikely to ease, whereas, the ECB is expected to extend monetary stimulus
The economic data in the UK has beaten most expectations. Considering the strong data and higher inflation the BOE has changed their stance from dovish to a “neutral” policy bias. Lloyds bank doesn’t see the BOE loosening.
On the other hand, the eurozone inflation is likely to lag the ECB’s inflation target for its forecasting horizon, which increases the chances of further easing.
“We expect the central bank to announce an extension to its asset purchase programme (at the current pace of €80bn/month) for an additional six months, through to September-2017. The respective monetary policy outlooks suggest that there are upside risks to GBP/EUR in the coming months,” said Gajan Mahadevan.
Divergence between the UK and German yields
The sharp rally in the UK 5-year and 10-year yields has been driven by four factors, according to Mahadevan.
Firstly, the fall in the sterling has stoked inflation, which is only likely to increase next year; secondly, reigning back on further monetary stimulus from the BOE; thirdly, added fiscal spending in the UK will worsen the government’s budgetary position and lead to high inflation; lastly the UK yields have piggybacked on the rising US yields.
On the other hand, the German short-dated yields have made new record lows. This divergence has been one of the supporting factors for the GBP/EUR.
Uncertainty surrounds on the timing of triggering Article 50
There are reasonable doubts whether Prime Minister Theresa May can meet the self-imposed deadline of March 2017 to trigger Article 50.
If the Supreme Court sides with the High Court judgement, the whole process can get delayed, as the PM will then have to consult the Parliament.