The euro to British pound sterling exchange rate (EUR/GBP) shot higher through the course of Friday's trading session thanks to some expectation-busting economic data; Sterling and has managed to hold these gains on Monday morning. Our assessment of the latest forecasts for the pairing continue to broadly favour Sterling.
In late morning trade we see the euro sterling trading a touch softer at 0.8242. The pound to euro is therefore trading at 1.2131. Until we get some solid first-tier data out of either the UK or the Eurozone we would expect the rate to remain around current levels.
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The euro pound sterling over the past 24 hours
The lack of liquidity is becoming an increasing problem for the Eurozone, ultimately forcing money-market rates higher. This suggests that the need for the ECB to act against tightening conditions is approaching.
"This morning, the January Rightmove house price rose 1.0% M/M and 6.3% Y/Y. EUR/GBP declined a few ticks this morning and is holding near the 0.8235/25 support. Later today, the UK calendar is empty and the EMU one contains only second tiers data. So, technical considerations will prevail," says Piet Lammens at KBC Markets.
Today's euro / sterling exchange rate forecasts
Looking at the latest forecasts for the euro pound exchange rate (EUR/GBP): "Friday’s sharp sell-off reinforces the broader bearish trend. Support lies at 0.8231, a break below which would expose the critical 0.8160. Resistance is at 0.8291 ahead of 0.8349," says Gareth Berry at UBS.
"Whilst the outlook for the UK is improving, the eurozone is still trailing behind and higher levels are in sight. For now though, we expect more trading around 1.21," says Sasha Nugent at Caxton FX.
Piet Lammens at KBC Markets says:
"We look out whether the euro decline will continue. At least for now, there is no indication that the euro is preparing a comeback. Sustained trading below the 0.8225 support hurts the technical picture of EUR/GBP. Such a break can already occur today, but we need confirmation via more strong UK data to before speaking about a new upleg of sterling.
"In this respect, Wednesday’s UK labour market data might play an important role. A sharp decline in the number of unemployed and/or the unemployment rate will raise speculation that the BoE might be forced to raise rates earlier than expected."
ICN Financial give their euro pound exchange rate forecast:
"The pair resumed negative trading last Friday and approaching the Falling Wedge support shown on graph at 0.8220, where we expect an upside rebound from that level targeting the Wedge resistance at 0.8380. Stochastic and MA 50 & 100 explain the current downside move and the pair requires stability above 0.8220 to support positivity in the coming days, where the upside move remains favored with targets extending toward 0.8570 after the breach of 0.8380."
MIG Bank, in a technical note to clients, says:
"EUR/GBP moved sharply lower on Friday. Prices are now challenging the recent lows at 0.8231 (09/01/2014 low, see also the support at 0.8225). An initial resistance lies at 0.8251 (intraday high). A more significant resistance can be found at 0.8286 (15/01/2014 low).
"In the longer term, despite the successful test thus far of the support at 0.8523, the underlying bearish trend remains negative. We favour further gradual weakness towards 0.8160 (61.8% retracement of the 2012-2013 rise)."