Euro Pound Exchange Rate Forecasts: EUR Predicted to Sink to 0.83 by OCBC; British Pound Misses out on Post-PMI Bounce

At 09:55 the Euro Pound exchange rate is 0.25 pct lower at 0.8445. The Pound to Euro exchange rate is thus quoted at 1.1841.

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We are initiating a Sell on the EUR to GBP say OCBC Forecasters

If we look at the price action of the EUR/GBP since the start of August it is understandable as to why Emmanuel Ng at OCBC Bank has initiated a Sell call on the pair:

Ng says: "We instituted a tactical sell EUR-GBP (spot ref: 0.8489) targeting 0.8330 with a stop at 0.8570. With the pound underpinned by a supportive data stream, if the BOE’s Carney is less than strident in talking down rates on Thursday, the cross may have room to test lower if the ECB remains sufficiently dovish on rate prospects."

Gareth Berry at UBS tells us: "The cross is under selling pressure and all evidence suggests more weakness to test the important support at 0.8398. Resistance is at 0.8549."

Sasha Nugent at Caxton FX says she is forecasting today's data to further underpin support for GBP:

"Last session saw the GBPEUR rate finally close above €1.18 for the first time since May after UK Construction PMI figures helped support market sentiment on the UK outlook.

"Today’s strong service PMI figure may allow sterling to hold onto yesterday’s gains."

UK Services Sector Hits a Record

UK service sector PMI surprises on the upside yet again, rising to 60.5 from 60.2 in July, beating expectations of 59.7.

Forex.com say: "Wow: UK service sector PMI is at its highest ever level since the series began in 1998... this recovery looks like it is real."

The Pound Sterling is largely unchanged reflecting that markets were actually anticipating a beat and that further GBP gains from here are likely going to be hard to come by.

However, the trend in favour of the British Pound at this stage remains convincing and we would suspect only the Bank of England, at tomorrow's MPC meeting announcement, will be able to halt recent price action.