Why won't the GBPEUR exchange rate break 1.24 & Will we see 1.70 on GBPUSD again this year?

Following the ECB's interest rate cut last week, most people were expecting a massive rise in the GBPEUR prices, but were shocked to see us down at the same levels as last week around an hour after the announcements.

The UK has been producing strong data consistently for the past few months, which shows that the UK is having a speedy recovery and has the strongest recovery out of the UK, Europe & USA.

What people must remember is that the BoE has already stated since late 2013 that they want to devalue the Pound, and this plan hasn't changed, so even though recent events in Europe and the USA have shown that our currency is stronger than the others, we are still finding that there is a resistance barrier at 1.24 on the GBPEUR rates.

Tomorrow we expect to see Sterling strength due to positive employment figures expected out of the UK, however I wouldn't expect a massive jump in the exchange rates, it is important to know that Europe can't devalue their currency any further due to export profits.

Most of you will recall that GBPUSD hit 1.70 at a 6 year high not so long ago, many clients have asked me on my opinion on whether this will happen again or not; My personal insight is that I feel the Dollar will gain strength throughout 2014, and I expect to see rates in the low 1.60 area by the end of the year, maybe lower. The reason for this being is that the U.S is making a concious effort in cutting their QE, and their tapering seems to be having a positive effect on their economy, so if you are a Dollar buyer, it may be worth hedging yourself now as we are still above 1.67.

If you require further analysis then please don't hesitate to contact me directly; prem.raja@currencies4you.com