Pound to Euro Exchange Rate Forecast Cut to 1.16

The British Pound was the second-worst performing currency in the G10 arena in the week ending 16th September. GBP’s August-September rally came to a sudden halt having dropped just as it touched the 1.20 area against the Euro.

Only the Canadian Dollar fared worse while the Japanese Yen and US Dollar outperformed their rivals suggesting safe-haven currencies were in demand.

The Pound is now eyeing a test of 1.16 in GBP/EUR while the GBP/USD is on the cusp of breaking 1.30 support. That Sterling-Euro’s rally failed at 1.20 should come as no surprise – this is simply a big number that traders were targeting as an entry point to press the sell buttons again.

The heavy data week that was the 12th-16th September should have seen GBP better supported. Inflation data was hardly a disaster, UK wage and employment data remain robust and UK retail sales are growing at a clip. Yet, GBP is turning notably lower.

Driving the weakness were increased bets that the Bank of England would cut interest rates again in November, but there was no marked swing towards such expectations to justify the persistent GBP selling pressure, poundsterlinglive.com reports.