Market experts believe that the EUR could hit 0.88 pounds, while the Sterling would drop below $1.20. What is your Pound vs Euro Forecast 2017?
23 December, AtoZForex – The Sterling slipped, as we approach Christmas holidays. The Pound is dropping for the fourth straight day versus the EUR on investors’ worries about the UK’s economic outlook for 2017.
Pound vs Euro Forecast 2017
While the year of Rooster is 8 days away, the Sterling is losing its positions against the common currency. GBP was 0.9 percent down against the EUR on Thursday, reaching 0.85 pounds, its two-weeks low. Moreover, the Pound dropped below $1.23 against the dollar, marking its lowest level since November 2. The overall fall of Pound is accounting for 4 percent since 6 December.
Thursday's confidence index data indicated a borderline improvement in consumer’ views of their personal financial in December. However, the measure stayed in the negative trend. Markets’ expectations for the UK’s economic outlook signaled further decline. The data came weakest since April 2013, being beaten only by the post-Brexit July 2016’s figures. The chief economist at IHS Global Insight, Howard Archer, believes that worries around the UK economic outlook “fuels the belief that consumer spending will slow markedly in 2017 amid weakening fundamentals”.
Additionally, the decision of the EU Court of Justice in relation to the ratification of the future EU trade deals weighed on GBP. The Court ruled out that the ratification of the EU trade deals should be in control of the national parliaments rather than EU institutions. Market observers believe that the ruling implies that the Brexit UK EU deal could be vetoed by a single member state. This further stresses the complexity of approaching Brexit talks. AtoZForex believes:
We saw bearish price developments from GBPUSD. Last two days the pair manage to lose more than 120pips. The overall trend for this pair is on bearish direction. We can expect the pair to continue as low as 1.2085 level within coming year.
GBPUSD chart (Click to zoom in)
Brexit hits hard
The Pound has been largely weakened this year by such events, as Brexit and Italian referendum. The currency set a 31-year low of little above $1.21. in the middle of October. Afterward, GBP recovered 5 percent, being backed by seemingly fading Brexit concerns. A foreign exchange strategist at Nomura, Jordan Rochester, has stated:
“Our concern is that the market is too complacent and optimistic in its Brexit pricing as UK asset pricing seems to suggest the market is moving away from a hard Brexit pricing, with little concrete reason.”
Mr. Rochester has added that any setbacks in economic data could drive the EUR up higher versus GBP. The common currency could hit 0.88 pounds, while the Sterling would drop below $1.20. Another key financial player, UBS, believes that the recent Pound strength will not last long:
“We have argued that a Brexit-induced adjustment in the UK’s current account will necessitate further currency weakness. Although it was possible to envisage an eventual soft Brexit outcome, this would take the time to unwind, meaning “the direction of travel remains one towards Brexit.”
Ultimately, Pound could get any direction against the USD. The key influential factor is the US economy stance.
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