Sterling euro predictions for the week ahead

With pound vs euro exchange rates fluctuating in the lower teens, this week I believe there is a good chance that exchange rates could fall further and break through the 1.10 barrier.

The EU are set to release their latest inflation numbers Tuesday morning. Inflation has been steadily rising due to the €80bn quantitative easing program set out by the European Central Bank.

The strength of the euro has been improving in recent weeks therefore I don’t expect inflation to rise further this month. However if inflation remains stead at 1.3%, this will put further pressure on the European Central Bank to cut think about tapering the QE program. It was only last week when President of the European Central Bank Mario Draghi, hinted towards making adjustments in the Autumn.

Later in the week the Bank of England will release their latest interest rate decision. The inflation numbers dropped this month to 2.6% from 2.9% which has relieved the pressure the Bank of England were receiving about raising interest rates. In turn this has put further pressure on the pound and consequently exchange rates have taken a tumble.

The interest rate decision last month was split 5-3 in favour of keeping interest rates on hold. I expect this could now drop to 6-2 and that is why I believe GBPEUR could fall below 1.10.

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When purchasing currency it’s crucial to analyse both the currencies you will be trading, as your 2nd currency will also have an impact on the pair.

Feel free to email me the currency pair you are converting (GBPUSD, GBPAUD, GBPCHF etc) the reason for your conversion (company invoice, buying a property) and I will email you with my forecast for the currency pair and the process of using our company [email protected].

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