Pound euro exchange rate (GBP/EUR) outlook continues to favour the GBP; EUR under broad-based pressure

By Will Peters

pound euro exchange rate

The outlook for the pound to euro exchange rate is positive as the euro comes under mounting pressure right across the breadth of the global FX market place.

The pound to euro exchange rate is 0.28 pct up on a day-to-day basis; we see GBP/EUR trading at 1.2081. The euro pound exchange rate (EUR/GBP) is therefore at 0.8277.

Global currency markets are currently being characterised by a weak Euro, as our latest report on the subject shows.

NB: All the above quotes are taken from the wholesale inter-bank markets. Your bank will affix a spread to the rate at their discretion 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.

Outlook for the euro vs pound remains poor

The British pound continues to be the preferred currency in the EUR/GBP exchange rate pairing with the majority of analysts we follow predicting further gains for GBP.

"With the MACD firmly below its zero line, there’s potential for extension of the bearish trend. Support is at 0.8253, a break below which would expose 0.8160 (GBP/EUR @ 1.2255). Resistance is at 0.8346," says Geoffrey Yu at UBS.

Also favouring further downside is ICN Financial who tell us: "EURGBP resumed the bearish bias after testing area around 0.8320 yesterday, where we look for further downside towards the major swing low around 0.8250 (GBP/EUR @ 1.212). Overall, the bearish scenario continues to be favoured."

Beware, the Euro is still a contender

despite today's weakness be aware that the euro is by no means in a free-fall and remains a contender.

With the Eurozone recovering and peripheral yields falling investors continue to show an interest in Eurozone assets, snapping up Euro's to fund such interest.

"The euro remains relatively strong against the pound and GBP/EUR opens this morning’s session at 1.2065, although a little higher than yesterday’s opening level," says a morning note from UKForex.

Traders await ECB decision

Euro exchange rates also chose not to ignore data out of Germany where it was shown that the country's Trade Balance for November came in less than expected. Analysts had hoped for a reading of 18 BN EUR, but they got 17.8 BN instead. Not a massive miss, but a miss nevertheless.

Indeed, the euro is not likely to react to economic data ahead of tomorrow's ECB monetary policy decision. The currency has flat-out ignore some good news on the retail sales front. Retail Sales (YoY) (Nov) came in at 1.6%, well above expectations for a reading of 0.3%.

"We expect little market reaction with EUR/USD likely to remain range bound ahead of tomorrow’s ECB meeting. While the inflation numbers suggest little case for further ECB action, there remains some uncertainty over how and when the ECB will address the upcoming liquidity cliff," say Lloyds Bank Research.