Latest News

Pound to Euro Week Ahead Forecast: Retest of 2024 Highs Dependent on Eurozone Inflation


Pound to Euro Week Ahead Forecast: Retest of 2024 Highs Dependent on Eurozone Inflation By PoundSterlingLIVE

Breaking News



Published Feb 26, 2024 07:05
Updated Feb 26, 2024 07:11

Pound to Euro Week Ahead Forecast: Retest of 2024 Highs Dependent on Eurozone Inflation

PoundSterlingLIVE –

Pound-Euro underpinned by positive momentum
Retest of 1.1740 possible
But for now, strength will likely fade here
Eurozone CPI inflation is week’s key event

Pound Sterling retains a constructive setup against the Euro, and further advances can be expected this week, but a strong Eurozone CPI print would likely boost the Euro.

The past week was instructive for the Pound to Euro exchange rate from a technical perspective, as we saw a support base forming at 1.1660, which should underpin it over the coming days and weeks and allow for a retest of the year’s highs.

Last week’s sell-off was arrested in this region, and the recovery to the 1.17 level on Friday means we are now back in the middle of a well-formed range with greater confidence that the post-CPI inflation sell-off of mid-month has run its course.

We look for trade to pivot around 1.17 for the foreseeable future, and we suggest those with payment requirements realise that any significant diversions from here offer tactical opportunity.

In particular, should the recent rally extend to the hard barrier at 1.1740, we would expect strength to be sold into and the pair to pull back, as has so often been the case in recent months.

Of course, a breakthrough in this resistance area remains possible, but it would require significant buying momentum to smash through the significant orders layered in this vicinity and we are not sure whether anything in the near-term calendar can provide this impetus.

Note that momentum signals broadly support Pound Sterling, with Pound-Euro trading above its 50-, 100- and 200-day moving averages, which advocates for a retest of 1.1740 near term.

There is nothing on the UK calendar that will bother the Pound and UK interest rate expectations in the coming days, putting the onus on the Eurozone’s monthly CPI inflation data to provide excitement.

Thursday sees Germany’s inflation figures, released state-by-state, with the biggest tranche falling at 09:00 GMT, leading to the all-German figure at 13:00. (The expectation is 2.6% y/y.)

On Friday, the market looks for a headline Eurozone inflation rate of 2.9% year-on-year for February to be reported, down from January’s 3.3%. A downside miss would firm European Central Bank rate cut bets, leading to a weaker Euro.

Upside surprises would push back against rate cuts and underscore the Euro’s recent resilience against the Pound and Dollar.

“We expect these to show a further step down in inflationary pressures towards the 2% target. Before we get there, we will hear from President Lagarde on Monday as she comments on the ECB’s Annual Report,” says Ellie Henderson at Investec.

“We hope for any indication of how ECB thinking has evolved since the latest meeting,” she adds.

An original version of this article can be viewed at Pound Sterling Live

Pound to Euro Week Ahead Forecast: Retest of 2024 Highs Dependent on Eurozone Inflation

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Dollar gains ground in busy data week, US inflation in focus

Previous article

FTSE 100 live: Index to open lower, Oil price weak, Berkshire posts record profits

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News