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GBP/EUR Exchange Rate Forecast to Decline as ‘Brexit’ Fears Stoke Sterling Depreciation

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Soften after Ian Duncan Smith Resignation

The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.4% on Monday afternoon.

Having reached a monthly high against the USD last week, the British Pound declined on Monday morning as political uncertainty limited Sterling’s appeal. In particular, concerns regarding increased support for a British exit from the European Union has spooked investors.

In response to Chancellor George Osborne’s cuts to disability benefits in the latest budget statement, senior MP Ian Duncan Smith resigned. Smith is a vocal supporter of a ‘Brexit’, and his resignation in protest of the benefits cuts is likely to increase his popularity amongst many British voters. As such, investors fear that Smith’s resignation will garner more support for a UK exit.

Also weighing on demand for the UK Pound was news that the Confederation of British Industry (CBI) warned that the UK could lose 950,000 jobs by 2020 in the event of a ‘Brexit’. The Pound ‘trended weaker against the Dollar and Euro due to the political trembling over the weekend,’ analysts at Royal Bank of Canada in London stated. The CBI study ‘suggesting that the UK would be significantly worse off under an EU exit scenario’.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2787.

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Climb despite Divergent Speeches from ECB Officials

The Euro endured a mixed-faring versus its major peers on Monday morning after European Central Bank (ECB) officials gave divergent speeches regarding policy outlook. ECB Executive Board member Benoît Coeuré said that the latest policy measures will not be enough to spur Eurozone growth, and that the central bank will need to do more.

However, speaking in Paris alongside Coeuré, ECB governing council member Francois Villeroy de Galhau had a very different take on policy outlook.

‘To speak about further measures and still more unconventional ones is not on the agenda today. For the future, we will see,’ sated Villeroy. ‘We think that this package is appropriate and … I think that our forecast 10 days ago is probably on the safe side for the Eurozone if you look at growth,’ he added.

A slight drop in the Eurozone Current Account surplus during January had minimal impact on Euro exchange rates today with ECB board member speeches dominating trader focus.

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.2749 during Monday’s European session.

GBP/EUR Exchange Rate Forecast to Hold Losses ahead of UK CPI

Although today’s US Existing Home Sales data has the potential to cause changes to the GBP/EUR exchange rate, EU referendum uncertainty is likely to continue to limit the appeal of the Pound and leave the GBP/EUR conversion rate trending lower.

Tuesday’s European session is likely to see significant GBP/EUR volatility, however, in response to the UK’s Consumer Price Index for February. If UK inflation is shown to have improved the Pound is likely to rebound from today’s losses.

Tuesday’s German IFO data will also be of interest to those invested in the Euro, as will the German ZEW surveys.

The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.2828 during Monday’s European session.