Yesterday BNP Paribas asserted that the Pound will drop back from its recent surge against the Euro, arguing that the British currency has been pushed above its fundamentals by exaggerated optimism regarding UK economic recovery.
The Pound Sterling to Euro Exchange Rate was in the region of 1.1704 as of 11:50 GMT
According to BNP currency strategist Michael Sneyd, ‘Investors have become too bullish on the Pound. We should see a catch-up in Euro-Sterling as the better growth data from the Eurozone gets priced into the currency pair and Mark Carney reaffirms a dovish rhetoric to bring down UK yields. The rally in Sterling looks too aggressive relative to the rise in UK yields. Investors have over-interpreted the implications the data will have on monetary policy.’
And Sterling did indeed begin to retrace its recent bullish steps today, edging further away from the six-week high achieved on the 15th.
After Eurozone and German services/manufacturing PMI beat economists’ forecasts the Euro was supported and advanced on the Pound.
Although Sterling put up some resistance due to the expectation that tomorrow’s domestic growth data will show that the UK economy expanded by twice as much in the second quarter as the first, in a light British news day GBP/EUR movement was largely dictated by the positive Eurozone news.
The GBP/EUR exchange rate hit a low of 1.1644
The Pound also declined against the US Dollar as investor’s processed the increased odds of the Federal Reserve tapering stimulus before the close of 2013. With policy makers largely supporting the proposed tapering timeline at the latest FOMC meeting the US Dollar strengthened against the majority of its rivals.
BNP believes that the Pound could drop to 87.10 pence per Euro in the next two weeks.
Current Pound Sterling (GBP) Exchange Rates:
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The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.5565 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1704 >
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7326 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9932 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6421 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8547 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5772 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5037 >
(As of 11:50 GMT)
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