Euro forecasts and outlook: Lloyds Bank June exchange rate forecasts

The euro (Currency:EUR) has shown its mettle on the foreign exchange market place through the course of May and June - but what about the coming months?

In their latest currency outlook update Lloyds Bank have advised clients that they should be prepared for the euro to under-perform towards the end of 2013.

Economists at Lloyds say:

"The euro has been supported by an improvement in survey data and firmer inflation in May, helping to scale back expectations of further monetary loosening. EUR/USD briefly scaled 1.33, from below 1.28 in mid-May. However, the risks to the economic outlook remain significant, with at best a gradual recovery forecast in H2 2013, amid divergent performances across the member countries.

"Credit fragmentation represents a major headwind to recovery in the periphery economies, and the June EU leaders’ summit and forthcoming ECB meetings could have a significant sway on the outlook for the euro. The recent sharp rise in market interest rates also adds to strains.

"On balance, we expect a weak recovery, renewed speculation of monetary easing and slow progress on reforms to weigh on the euro in the year ahead. We forecast EUR/USD at 1.25 at end 2013 and 1.20 at end 2014."

To see a breakdown of the numbers please see the exchange rate table here.