Will the GBP/EUR exchange rate break above 1.2 soon?

The pound to euro exchange rate is trading 0.15 pct higher on Friday morning; the GBP/EUR now sits at 1.1957 - within touching distance of 1.2.

For days we have been reporting on the bullish forecasts being punted by various analysts with levels of 1.25 being predicted for next year.

However, before the pound euro reaches 1.25, or even 1.21 for that matter, a sustained break of 1.2 is needed.

Please keep in mind all quotations here are inter-bank spot rates. Your retail rate will be delivered with a spread being subtracted by your bank at their discretion. This is a competitive market though and the good news is that an independent FX provider will seek to beat your bank's rate, thus delivering up to 5% more FX. Please learn more here.

Euro under pressure

The shared currency remains pressured; a hearty bounce following the ECB rate cut has run out of steam.

Today's final Eurozone inflation figure for the year to October was confirmed to be at 0.7% - had we seen the rate higher some support may have been afforded to the currency.

"The expectation is that inflation will remain constant, and this shouldn’t result in too much movement in this pair. Any downside surprise however, could result in some severe euro weakness," says Sasha Nugent at Caxton Fx.

KBC analyst Piet Lammens says sterling is to remain supported:

"Sterling remains well bid, but we expect some consolidation after the recent rebound of sterling. There is probably additional news needed for EUR/GBP to go for a retest of the 0.83 barrier."

Analyst Luc Luyet at MIG Bank believes the recent relief rally in the euro sterling could finally have run its course. Giving his predictions for the EUR/GBP, Luyet says:

"EUR/GBP has likely ended its short-term bounce. A test of the recent low at 0.8301 is favoured. An hourly resistance can be found at 0.8416 (14/11/2013 high). Another resistance stands at 0.8477 (04/11/2013 high).
"The medium-term declining channel, in place since the February 2013 top, calls for a mild bearish bias. We favour further declines below the support at 0.8333. Other supports can be found at 0.8225 (28/12/2012 high) and 0.8082 (01/01/2013 low)."