Pound Euro Exchange Rate: GBP/EUR Volatility to Spike; What are the Key Numbers to Watch out For?

The Pound to Euro exchange rate is trading 0.08 pct in the red 1 GBP converts into 1.1872 EUR.
The Euro to Pound exchange rate: 1 EUR converts into 0.8423.

Please Note: The above are spot market quotes; your bank will affix a discretionary spread to the figures when passing on a retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please learn more here.

Euro Industrial Production Figures Ahead

For the Pound Sterling to Euro exchange rate the day really kicks off at 10 AM when the Bank of England's MPC appear before parliament (see below) and Eurozone industrial production figures are released.

"With the euro area exiting recession in Q2 after six successive quarters of falling output, markets will be focussed on this morning’s industrial production figures for signs that this return to growth is sustainable," say Lloyds Bank Research.

At last week’s ECB press conference following the policy rate decision, President Draghi emphasised the fragility of the recovery and revealed that the Council had discussed an interest rate cut.

The numbers to look out for:

• Industrial Production w.d.a. (YoY) (Jul): Expectations -0.1%
• Industrial Production s.a. (MoM) (Jul): Expectations +0.1%
  
  

Forecasting the Euro to Fall Back Against the Pound

The longer-term forecasts continue to favour the British Pound over the Euro.

Yesterday we heard from Kathy Lien at BK Asset Management who told us that any GBP/EUR declines should provide those with an eye on the currency markets with the change to pick up cheap Sterling. Read her views here.

Pound Sterling: Carney, Fisher, Miles and McCafferty Appear Before Parliament Later

"BoE Governor Carney and MPC members Carney, Fisher, Miles and McCafferty are speaking before the Parliamentary Treasury Committee on the August Inflation Report. The discussions could reveal fresh information about the Bank’s thinking following market reaction to its forward guidance announcement," say Lloyds Bank Research in a morning foreign currency brief to clients.

Sell the Pound Against the Euro

We do get a more bearish view on the British Pound Sterling from the team at UniCredit Bank who today say they see potential in selling into Sterling strength:

"The testimony of the BoE’s Governor Mark Carney before the UK parliament will attract interest, but the bank’s forward guidance is likely to be simply re-affirmed.

"Any cable’s spike towards 1.59 remains a selling opportunity and we also again favor buying EUR-GBP on dips below 0.84."

Technical forecasters at ICN Financial Markets say they need to see a break below 0.84 before any extension to the Euro's sell-off against the British Pound is realised.

Commenting on the Euro to Pound exchange rate ICN say:

"Price was rejected from 0.8400 pivotal support, and neckline for the potential major double top pattern.

"The pair settles above this key neckline but below the 200-days SMA and the main broken ascending support, and that favors the bearish scenario, however a break below 0.8400 is necessary to confirm the extension of the bearish wave."