For this EUR forecast, we’ll see how the EUR has seen its value decline further this week, with losses against both the GBP and the USD. This negative trend pushed GBP/EUR rates to a two-year low, as investors continue to sell-off their single currency positions, amid concerns over the current slowdown in the Eurozone economy.
The silver lining for those clients holding the single currency, is that it did at least find plenty of support around 1.17 against the Pound.
It even threatened to sustain a move back below 1.16 yesterday, but this positive spike was short lived. The Pound moved comfortably back through this threshold by the close of European trading.
The current negative outlook for the Eurozone economy, coupled with what seems to be a breakthrough in Brexit talks, has shifted the markets perception and with it the value of GBP/EUR.
The EUR could be set for a period of relative stagnation, with the forecast for economic growth this year uninspiring to say the least. The EUR has been a victim of its own success, as it outperformed almost every other major currency for much of last year.
However, with key Eurozone economies such as Germany, France & Italy all struggling for one reason or another, coupled with what could be the end of the Brexit saga later this month, the EUR has lost much of its support from last year.
I do not anticipate a move back towards its post-referendum highs, unless the UK leave the EU with no Brexit deal agreed. This is a scenario which now looks increasingly unlikely.
All eyes will now turn to tomorrow’s European Central Bank (ECB) interest rate decision and subsequent monetary policy statement. Whilst interest rates are likely to remain at 0%, ECB President Mario Draghi’s statement is likely to hold most weight with investors.
He is likely to acknowledge the current economic slowdown but will also try to calm fears of a recession. The EUR’s value will likely to be affected by how positive or dovish the ECB’s statement is.
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