Pound Euro Exchange Rate: GBP/EUR Outlook is Positive as the Bullish Wave Remains Intact

Looking at the wholesale markets we see conditions continue to favour Sterling:

• The Pound to Euro exchange rate (GBP/EUR) is 0.19 pct higher at 1.1929.
• The Euro to Pound exchange rate (EUR/GBP) is at 0.8382.

"EUR/GBP is consolidating within a very tight range around 0.8400 key horizontal resistance (broken neckline for a double top), accordingly, the bearish wave remains intact and the bearish scenario is favoured," says a morning outlook note from ICN Financial Markets which alludes to the continued bias in favour of the UK currency.

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Update: GBP/EUR Surges Higher on Bank of England MPC Minutes

Bank of England Minutes Released.

MPC 9-0 voted to  keep rates and  stimulus steady.

"Tentative signs spare capacity may be beginning to fade" - a bullish, pro-sterling assessment.

This is the reaction of the GBP/EUR:

Sterling's big hurdle of the day

"The Bank of England will take the central bank stage this morning with the publication of the latest round of meeting minutes. Given the outperformance of recent UK data, some divergence in members expectations may very well be present. Martin Weale dissented last month on the basis of the inflation ‘knock out’ to forward guidance and we would expect to see some of the more hawkish members of the committee expressing some concern," says Jeremy Cook at WorldFirst.

Lloyds Bank Research on what to look out for today:

"Given the Bank of England’s forward guidance, there will only be passing interest in the minutes to September’s MPC meeting. Indeed, today’s FPC meeting is of more interest, although the details of the outcome will not be published until September 26th.

"It seems that for now at least the need for further monetary stimulus, on top of forward guidance, has diminished.

"We will watch for signs that members are surprised by the recent strength of indicators and any implications for their unemployment projections, including any divergence from the central case that unemployment will remain above 7% until at least 2016.  Votes on policy are likely to have been unanimous."

Outlook for the Euro remains challenging

The Pound to Euro exchange rate is likely to maintain a positive upward momentum over the longer term, particularly with the outlook for the Euro remaining challenging, as noted by one prominent analyst here.

However, we note that the Euro is prone to strength in the short term.

The headline EUR/USD pairing could well provide the EUR/GBP with some support today, as Luc Luyet at MIG Bank notes:

"EUR/USD remains in a short-term bullish configuration as long as the support at 1.3325 holds. Resistances are at 1.3410 and 1.3452. Another support can be found at 1.3254 (13/09/2013 low).

"The FOMC decision tonight is likely to induce short-term volatility. Markets are expecting a $10bn tapering associated with dovish comments to tame the rise in borrowing costs."