Exchange rate forecasts: Pound to euro could hit 1.256 today say UKForex but currency players must keep an eye on Spain

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Published on Friday, 21 September 2012 10:18

Written by Rob Samson

The pound to euro exchange rate is currently trading at an unchanged rate of 1.2504 at 11:13 AM in London.

Commenting on the forecast for the GBP/EUR is Alex Edwards at UKForex who says we should expect a range today in the GBP/EUR rate of 1.2490 to 1.2560.

1.25 is a critical support level for sterling against the euro as the significant of 1.25 number has often proved to be a sticky point.

Those looking keeping an eye on the sterling to euro should watch issues in Spain as this appears to be the main fundamental driving point for the currency. 

Thursday’s Spanish bond auction was a big success.

€4.8 billion worth of three and ten-year government bonds were sold at a lower than usual yield compared to recent and previous auctions.

According to reports Troika is closer to agreeing a deal with the Greek coalition on further budget cuts too and we could have an agreement by the end of the day today.

"This has helped lift EUR/USD off of yesterday’s weekly low of 1.2930 and the pair opens the morning at 1.2970. An interesting article in the WSJ this morning today however makes a good point," says Edwards.

Although Spanish bond auctions have gone well, if this continues to be the case it means an imminent Spanish bailout request becomes less likely.

It risks the market becoming more uncertain about the timing of a bailout for the country and uncertainty isn’t really what Europe needs right now. EUR/USD has failed to make it through 1.3000 and will unlikely make a sustained move through the level today amid a lack of any top tier economic data.