Libra Euro Forecast 2024: How to Capitalize on the GBP/EUR Cross Opportunities

Why Does the GBP/EUR Pair Remain Profitable for Traders?

The cross between the British pound and the euro continues to be one of the most dynamic currency pairs in the Forex market. Unlike other minor crosses, GBP/EUR represents the confrontation between two of the world’s most influential financial centers: the United Kingdom and the Eurozone. This makes it an attractive option for those looking to capitalize on exchange rate fluctuations with sufficient volume and reliable economic data.

The GBP/EUR forecast depends on multiple variables: decisions by the Bank of England and the ECB, divergent economic cycles, and the persistent legacy of Brexit. Currently, in January 2023, the pound was trading around €1.124, presenting a challenging outlook that requires rigorous technical analysis.

The Lasting Impact of Brexit on the Exchange Rate

Since the 2016 referendum, Brexit has fundamentally transformed the dynamics of the GBP/EUR pair. Before that date, the pound was consistently trading above €1.30. The vote triggered the steepest decline of the British pound in three decades, dragging its value to levels unseen in decades.

The years following (2017-2019) generated sustained volatility, pushing the pound to historic lows against the euro in August 2019. This depreciation responded to market expectations of trade frictions and prolonged political uncertainty in the UK. As financial institutions sold assets in pounds, demand for the currency decreased proportionally.

In 2022, the picture shifted slightly. The cross started near the upper end of its five-year range (1.21 €), but since summer, it declined toward 1.08. This trend reflects both shared macro pressures and divergences in central bank policies.

Historical Data Defining the Current Range

Key exchange rate information:

• Closing price (02/02): 1.120 €
• 1-month change: -1.45%
• 3-month change: -2.03%
• 52-week range: 1.0786 - 1.2190 €
• All-time high: 1.752 € (May 2000)
• All-time low: 1.02 € (December 2008)

For traders, understanding these levels is essential. A 52-week range of just 14 cents suggests consolidation, while the total historical amplitude (0.73 €) reminds us that significant movements are possible under extraordinary circumstances.

Macroeconomic Factors Driving the GBP/EUR Forecast

Variations in GBP/EUR respond to three fundamental pillars: the differentiated economic context, divergent monetary policies, and market sentiment.

Contrasting economic expectations: According to the latest available forecasts, OECD downgraded the UK’s growth projections for 2022 and expects zero growth in 2023. For the Eurozone, forecasts improved slightly, anticipating a relatively stronger performance. This economic asymmetry favors the euro over the pound in the short term.

Monetary policies aligned but with nuances: Both the Bank of England and the European Central Bank have adopted interest rate hike cycles. However, the speed, intensity, and duration of these cycles differ significantly. If the UK accelerates its restrictive policy while the ECB slows down (or vice versa), the GBP/EUR pair will react with volatility. The more cautious approach recently adopted by the British authorities has pressured the pound, although solid employment data could reverse this trend.

Expected recession vs. relative resilience: The UK economy is projected to enter recession over the next five quarters, with a sluggish recovery expected in 2024. Inflation could reach 11% by then. Although the Eurozone faces similar pressures, its economic diversity provides some comparative buffer.

Volatility: Characteristic, Not Weakness

The GBP/EUR has experienced relatively low fluctuation levels in recent periods, a trait appreciated in international trade. However, this apparent stability is deceptive. Potential volatility remains latent because any change in trade negotiations between the UK and the EU, or unexpected deviations in economic cycles, can trigger large movements.

For traders, current low volatility means entry opportunities with less noise, but also requires greater precision in identifying structural break points.

Operational Strategy: When and How to Trade GBP/EUR

Synchronization: the European session is key

The GBP/EUR pair reaches its highest liquidity and volatility during the London trading session (08:00 - 17:00 local time), which accounts for approximately 35% of daily Forex volume. Trading outside these hours reduces spread quality and increases slippage risk. The simple principle: don’t trade when it’s nighttime in London.

Economic Calendar Monitoring

Before each trade, check the scheduled economic releases from the UK and the Eurozone. Data on inflation, employment, manufacturing, and services are critical catalysts. Especially important are the interest rate announcements from both central banks, as they generate immediate revaluation of the pair.

Trend Analysis and Positioning

Use technical trend indicators to identify the likely direction of the cross. Since GBP/EUR lacks the extreme volatility of other pairs, medium- and long-term trend analysis is usually more reliable than short-term scalping.

If your GBP/EUR forecast is bullish (believe the pound will strengthen against the euro), open buy positions when the price hits confirmed supports. If bearish, sell at established resistances.

Instruments: CFDs as an Alternative to Physical Currencies

Contracts for Difference (CFD) allow speculation on the direction of GBP/EUR without owning actual pounds or euros. If you believe the cross will rise to €1.15, open a long position. If it drops to €1.10, open a short position. Profit is the difference between your entry and exit prices, multiplied by the number of contracts.

Current Outlook: Mixed Signals for the Next Quarter

In mid-January 2023, the pound had fallen to its lowest level against the euro since September (1.124 €). The light economic calendar for the month initially limited movements, but the market was closely watching inflation expectations ahead of the Bank of England’s rate announcement.

The recent defensive stance of the British authorities has been a drag, but previous employment figures suggested that the risk could tilt upward for the GBP/EUR pair in the coming weeks. Market sentiment, by definition volatile, will continue to be a key determinant.

Conclusion: The GBP/EUR Forecast Requires Active Vigilance

The GBP/EUR cross remains one of the most traded and watched instruments in Forex. To achieve favorable results, you must stay updated on economic trends, monetary policy changes, and economic calendar data. The pound has recently stabilized against the euro, but this calm is relative.

In 2023 and beyond, expect the GBP/EUR forecast to continue being influenced by Brexit’s legacy, divergent economic trajectories between the UK and the Eurozone, and the synchronization of interest rate cycles. With discipline, rigorous analysis, and risk management, traders can capitalize on the opportunities this dynamic currency cross continues to offer.