Forecasts for GBP to EUR
The British Pound (GBP) and the Euro (EUR) have both been subject to recent exchange rate analyst forecasts that paint a cautious picture for their future performance against the US Dollar (USD). Currency strategists from Wells Fargo, TD Securities, and Danske Bank collectively suggest that the GBP could decline to 1.20 or lower against the USD by early 2024, explaining the potential end to the Bank of England's policy tightening and the fragility of the Pound as contributing factors. HSBC and Barclays also reflected a less optimistic stance, recently shifting from their previously bullish perspectives. The Pound's volatility, influenced by political events such as Brexit and shifts in central bank policy, was highlighted when GBP/USD hit an all-time low since decimalization in September 2022, underscoring the momentum-driven nature of "Cable".
In contrast, the EUR is expected to trend cautiously upwards as indicated by the forecasts from JP Morgan and ING, which suggest a potential rise towards 1.15 from a level of 1.07 at the end of 2023. However, Danske Bank's assessment points to a downward trajectory for EUR/USD, potentially dropping below parity within 12 months. With a recent reversion in consumer confidence in both the UK and Eurozone, economic performance could diminish according to HSBC, which may impact the Euro's valuation. Moreover, the EUR has been sensitive to movements in oil prices, and considering the recent Brent Crude OIL/USD data showing a 5.3% dip below its 3-month average, with high volatility, external commodities markets could influence the EUR.
Addressing the GBP to EUR exchange rate, there seems to be some upward pressure, with recent data showing the GBP to EUR at 60-day highs near 1.1621. This uptick, albeit modest, positions the Pound slightly above the 3-month average against the Euro within a stable 2.7% trading range. This relative stability in GBP/EUR contrasts with the individual predictions against the USD, where more significant movements have been forecasted. FX analysts will likely continue to monitor factors such as central bank policies, consumer confidence, and broader economic indicators to refine their assessments for both the GBP and EUR going forward.
