Whether you are trading short or long, there are a few things you need to know to make the most of your EUR/GBP forecast in trading. These include your own risk tolerance, how much you can afford to lose, and your investing style. The EUR/GBP FX pair has always been highly volatile. Its price fluctuates between about a couple of points per day. The pair’s volatility is typically driven by macroeconomic data released during the European trading hours. However, its most important factor is sentiment. It’s value is driven by investors’ expectations.
What’s About The Currency Forecasting?
A key factor in eur gbp forecast is its relationship with the European Central Bank (ECB). The ECB’s monetary policy decisions influence the price of the pair. Analysts predict that the pound will weaken against the euro in the long run. They expect the Bank of England to begin raising interest rates more aggressively than the ECB in 2022. It will need to increase interest rates faster to stimulate the UK economy. The Bank of England’s Monetary Policy Committee (MPC) said it would provide the next interest rate decision after the finalized Brexit deal. The deadline for a deal with the EU was on 15th October, but it was open for an extension due to social and economic distancing protocols.
As a result, investors rushed to sell GBP and buy euros. This resulted in a massive drop in the value of the pound. Analysts at ING predicted that the pound would weaken even further against the euro in the long run. They projected that EUR/GBP would hit 0.88 by the end of 2023.
Pound To Dollar Forecast
During the past year, the pound to dollar forecast exchange rate has fluctuated between 1% and 2%. However, there has been a significant slump in the last few weeks. The pound has lost over 5.46 percent in the last four weeks, compared to a loss of only 1.8% in the previous four weeks. The currency pair has recovered some of its lost ground, but has also lost some momentum. There are a number of economic data releases this week, including the UK’s GDP data and the US’s PPI data. Both will likely highlight diverging economic prospects between the UK and US. This could weigh on the Pound to Dollar exchange rate.
The US Dollar started off the week slowly, but has gained ground as a result of hawkish bets by the Federal Reserve and safe-haven flows. However, US inflation data was worse than expected, which dashed investor hopes for an aggressive Fed rate hike.
On the other hand, UK inflation is elevated and could boost the pound. There are also concerns over the UK’s future economic growth and recession. Amid rising inflation, there is increasing pressure on the Bank of England to raise interest rates.
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The Bottom Lines
The next meeting of the BoE is scheduled for November. Governor Andrew Bailey has said policymakers are ready to adjust interest rates if necessary. The bank has raised rates by 25 basis points in September. The UK Autumn budget is expected to include a raft of tax rises and spending cuts. These are expected to increase the gap between the UK’s fiscal shortfall and its revenue.
