British Pound to Euro Exchange Rate Forecast to Fall 5%
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The decline in Pound Sterling is about to resume according to new research from two of Europe’s largest investment banks, the only question up for debate is the speed of the declines.
The Pound to Euro exchange rate (GBP/EUR) has rallied of late, putting behind a one year low at 1.1614, reached on the 7th July, to hit a best rate above 1.20 towards the latter part of July.
A fresh bout of buying interest has been witnessed as the Bank of England's Monetary Policy Committee meet to discuss the options available to them in their quest to shore up the UK economy following the shock June Brexit vote.
While the currency pair is still below the 1.20 highs at present, a short-covering rally stoked by uncertainty as to the results of that meeting keeps a test of the monthly best alive.
The downside appears to be protected by the strong buying interest located at the 1.18 support zone.
Those seeking out a stronger Pound should be aware that the outlook remains biased to the downside and the risks of waiting too long are high.
“As the market gradually recovers from the shock and the flash crash, everything points to the next leg being bearish again,” says a note from Olivier Korber, a strategist at Societe Generale.
The view echoes that held by other major forecasters, such as Morgan Stanley and JP Morgan, all of whom believe the next bout of stimulus from the Bank of England will be responsible for the next move lower.
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