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Euro Sterling Exchange Rate: EUR/GBP Weakness Wanes; More Gains Ahead for EUR?

By Will Peters

euro sterling exchange rate

The euro to pound sterling exchange rate continues to enjoy a relief rally as markets show their reluctance to push the EUR to fresh lows.

Monday morning sees the continuation of the Friday euro / sterling exchange rate rally. At 11:04 EUR/GBP is quoted as being 0.09 pct higher on a day-to-day basis at 0.8302.

(Please note our EUR/GBP quotes are taken from the spot markets; your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer and deliver you up to 5% more currency. Please learn more here.)

The basis of the current euro rally against the British pound has its roots in Friday's poor industrial production figures.

The weakness came as a shock to markets and reminds us that no trend lasts forever. Those looking to buy euro's at better rates will be disappointed that they have missed out on what are likely to be near-term highs. A return to strength for GBP will be hard to come by in the short-term.

Euro sterling exchange rate to find support

Analysts have reacted to the EUR's comeback and predict further gains lie ahead.

Lloyds Bank Research have today said there is little near-term hope for GBP:

"Short term UK yields fell in line with US yields on Friday, and against this background it now looks difficult to achieve any further extension of EUR/GBP weakness in the absence of more data.

"The 0.83-0.8320 area should nevertheless provide good resistance to a EUR/GBP recovery ahead of this week’s CPI and retail sales data. However, weakness in retail sales as suggested by some surveys could see a more extended reversal of the recent EUR/GBP decline. For today, there is little on the calendar that seems likely to trigger significant movement."

Time to buy your foreign currency

While the GBP has come off recent highs it is worth keeping in mind we are still witnessing decent levels in the currency.

Analysts at Curerncy Index say:

"Whilst the GBP/EUR battle is ongoing, elsewhere the pound is demonstrating its current strength with particularly good buying levels across a range of currencies – USD, CAD, SEK and ZAR to name but a few.

"In general the pound is strong across the board at present so any of you with upcoming currency requirements may like to take advantage of these excellent rates now."

Ahead we have a quiet week ahead from the perspective of data releases. However, we may well see some movement outside of the recent range, particularly between Tuesday and Thursday.

Tuesday sees UK Consumer Price Index data (MoM and YoY) and USD Retail Sales (MoM), Thursday brings Australian Unemployment rate, Eurozone unemployment rate, Index of consumer prices (MoM and YoY), EUR ECB monthly report EUR Consumer Price Index USD Consumer Price Index Data.

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