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GBP/EUR exchange rates finally breach 1.40 once more (Joshua Privett)
Events over in the US last week were what allowed the currency markets to permit a rise on GBP/EUR through the resistance level set at 1.40.
The printed hints made by the Federal Reserve Bank of America that interest rates may rise as early as December have hit the financial markets heavily.
With USD/EUR being the most heavily traded currency pairing in the world, when capital from all over the globe came pouring into the American economy with expectations of interest returns on their assets, it was the Euro who was hit most heavily. The Euro weakened against all its currency pairings throughout the mass sell-off in favour of Dollars, causing GBP/EUR to rise steadily over the course of last week, eventually breaking the 1.40 resistance level on Friday afternoon.
Will GBP/EUR remain above 1.40?
In short it’s very unlikely that this will be sustained, but I believe we will repeatedly see rates above and below 1.40 until Thursday this week.
On Friday GBP/EUR actually reached 1.40 from a starting point that day of 1.38. This kind of significant movement is rarely met without some form of short term correction. With GBP/EUR at 1.401 while weekend trading stops, it only requires a very slight correction for 1.39 to be available once more.
Capital will continue to flow out of the Euro and into the USD whilst companies and investors reform their strategies for the start of the next month, and for many the start of their new financial year with the above news in mind. So we may regularly see 1.40 broken through and lost this week.
Thursday, however, will likely put a stop to the Pound’s recent rally against the Euro.
The Bank of England interest rate decision and monetary policy statement will be released on Thursday, and based on the previous three months, each time the Pound has weakened against the Euro, sometimes heavily.
Delays in an interest rate hike have been a common occurrence. Global slowdowns caused by poor Chinese performance, and the UK facing its worst inflation levels since records began have all contributed to repeatedly dovish tones. With little change in the global landscape since the last report, I expect no difference this time around with a fall on GBP/EUR as a result.
I strongly recommend that anyone with Euros to buy over the coming months should contact me on [email protected] to discuss a strategy on your transfer in order to maximise your Euro return.
Before Thursday, peaks and troughs can be identified to help you buy while the central level is above 1.40. I can also supply a competitive quote on your transfer and have never had a problem beating the rates offered elsewhere.
Source: http://www.poundsterlingforecast.com/2015/11/01/gbpeur-exchange-rates-finally-breach-1-40-once-more-joshua-privett/
