"Linguistic contact was made in the sphere of Celtic place-names as the initially slow expansion of the Germanic tribes brought them gradually into the Celtic sphere of political and military influence and ultimately, with the increase of Germanic pressure, into occupation of Celtic territory with its Celtic (or pre-Celtic) names.
"One of the most important, but difficult examples is the name given by Caesar and Tacitus to the central German highland (Mittelgebirge): Hercynia silva / Hercynius saltus. The presence of y in these forms (together with Caesar's explicit observation) points to a Greek source, confirmed by Greek references to a moutain-range called Orkýnios or Arkýnia. The same name occurs in Germanic for parts of the Mittlegebirge (OHG Fergunna, Virgundia). but also as an appellative: Go. faírguni 'mountain (-range)', OE firgen 'mountain.' Correlating these forms makes it likely that behind the Greek forms there was a Celtic informant, since Germanic forms with f-drive from a p- (First Sound Shift) which would have been regularly lost only in Celtic (Lat. H- must be regarded as prosthetic). That we are right to assume an original p- is confirmed by a wider range of evidence from Balto-Slavonic. In Slavonic Perunъ occurs as the name of a thunder-god and in Lithuanian Perkūnas as the name of a god (in close association with oak-trees). The word is also found as an appellative: in the Baltic languages it means 'thunder', but in Latin (quercus < *perquus) 'oak.'
"The first question which this range of parallels poses is whether the Germanic examples derive directly from an IE form or whether, as has been suggested, they were taken over from Celtic before its loss of initial p- (and before the First Sound Shift, with the operation of Verner's Law). The answer to this hinges on the relevance of the Balto-Slavonic evidence, for its presence apparently weakens the exclusive Celto-Germanic connection required for any suggestion of Celtic influence. In the first place, the Baltic forms are not necessarily independent, for they could derive from Germanic. Secondly, we need to stress a difference in the onomastic use of this word: Balto-Slavonic it is used as the name of a god, but in Germanic, Greek, and Latin (and, behind these, Celtic) only as the name of a mountain-range (confirmed by the meaning of the Germanic appellatives). Thirdly, if the Greeks acquired the name of this north European range from Celtic, it is likely that the Germani did, too, for at many other points they encountered the Celts and adopted geographical names from them (e.g. Gmc. *Rînaz 'Rhine'). From this we may conclude that the Germani, whose contact with the Celts fits in chronologically with this, acquired knowledge of this geographical name from them.
"The other question is where precisely we may locate the Hercynia silva and this particular contact. The greatest extent (and therefore for us unusable) is attributed to it by Caesar's mention of sixty day's travelling time, but apart from this the name appears to have been applied different parts of the Mittelgebirge (OHG Fergunna refers to the Erzgebirge. Virgundia to a range between Ansbach and Ellwangen). Two other points, however, may allow us to place greater stress on the Erzgebirge. First, in the view of what we shall see in connection with the name 'Bohemia' it is significant that Velleius Paterculus, Strabo and Posidonius all located the Hercynia silva in the region, just as, secondly, Caesar also associated the Celtic tribe of the Volcae (who were probably settled a little to the east, in Moravia, and with whom the Germani also made contact) with this same wooded highland. It is this area, probably not before 500 BC, that we have to see one of the most important zones of contact between Celts and Germani - important perhaps because of military encounters, but certainly in view of its rich mineral resources of which the Celts made such good use.
The mention of Bohemia is of linguistic interest, too, since it contains the name of another Celtic tribe in this region, the Boii. True to the wide extent of the Celtic migrations the name of this particular tribe is attested from different parts of Europe and it also occurs in personal names (e.g. Boiorix) and place-names (e.g. Boiodurum, surviving in modern Beiderwies, opposite of Passau). The settlement area of theirs which concerns us is their occupation of the basin of the upper Elbe, for the classical authors who locate the Hercynia silva in this area are also quite explicit in mentioning the names of the Boii or Bohemia, or both. Tacitus, with an eye to the later occupations of this area by Germani says that the name Boihaimum still clings to the former lands of the Boii, even after its change of inhabitants (Germania 28). The same name occurs in the form Boiohaemum with Velleius Paterculus, whilst in Baias (Geographer of Ravenna) the s-shaped sign is taken as a mark of abbreviation (*Baiahaimum). There seems little doubt that this name, composed of a Celtic tribal name combined with a Germanic word for 'homeland' (cf. Go. háims), was coined to designate the formerly Celtic territory now occupied by Germani, as was already clear to Tacitus. As part of the assimilation of Germanic names to Celtic practice the form Boi(o)haemum shows a Celtic o (both in the stem and in the thematic vowel), whilst *Baiahaimum suggests a fully Germanised variant. It is from this latter form that MHG Bêheim and the modern Böhmen are derived, even though subsequent history means that it is now applied to yet another people. The geographical name has proved more static than the inhabitants.
"The Celtic Boii have also given their name to yet another tribe: the Bavarians. The earliest attestations of this tribal name are Lat. Baibari (Jordanes, where the -b- stands for -w-), Baioarii (Venantius Fortunatus, where o stands for w) and OHG Peigira (where g acts as a glide). These forms we may derive from *Bai(a)warjōz which, apart from the fact that it shows a Germanised form of Boii (o > a, as in *Baiahaimum), presents difficulties. Germanic formations with -warjōz to indicate inhabitants of a region generally show a geographical name as their first element, as with Anglo-Latin Cantuarii 'inhabitants of Kent' (cf. OE Cantware) or the OHG personal name Lantweri (literally 'he who protects the land', cf. Go. warjan 'to protect'). This explanation hardly applies to *Bai(a)warjōz, since the only evidence for *Baija as a possible geographical name was Baias with the Geographer of Ravenna, now regarded as an abbreviation of *Baiahaimum. For this Reason the reconstructed earliest form for 'Bavarians' is now regarded as a contradiction of *Baiahaimwarjōz. This linguistic reconstruction might suggest that in the course of their ethnogenesis the later Bavarians entered their new homeland from the north, from Bohemia, but this need not necessarily be so. If we take Boiohaemum in its original literal sense it meant not what we now know as Bohemia, but the land of the Boii who, on abandoning 'Bohemian' territory under Germanic pressure, moved elsewhere, including Pannonia, where Pliny located the deserta Boiorum. This aspect of the problem of Bavarian ethnogenesis (settlement from the north, from Bohemia, or from the east, from Pannonia?) will come up for discussion later when we consider the possibility of loanwords of Gothic origin in Bavarian.
"The last Celtic tribe for us to consider are the Volcae (Tectosages) mentioned by Caesar in the region of the Hercynia silva, for there is linguistic evidence that the Germani early came into contact with them. Although the Volcae, like other Celtic tribes, were taken far and wide in the course of their migrations Caesar placed those he had in mind in Germania, east of the Rhine. What he reported of them is said in the past tense and what we know of the location of the Volcae in Caesar's day does not suggest that they were still neighbours of the Germani. Caesar's statement is therefore about the past, as is borne out by his dependence on Greek sources in this passage. This is confirmed by our linguistic evidence from Germanic, since the tribal name, like that of the Boii, was borrowed into Germanic, yielding the form *Walh- (attested in OHG, OE, ON) where the development of k to χ shows that the loan word preceded the First Sound Shift and that contact between Germani and this Celtic tribe was probably made before the third century BC.
"Locating the place of contact geographically is made difficult by two factors: by the wide extent which Caesar attributed to the Hercynia silva and by the far-flung movements of the Volcae whom he associated with it. Accordingly, numerous attempts have been made to do this. These include the Rhineland (but do we know of Volcae in this region?), but also Hessen, the upper Main and southern Germany, all rendered unlikely by being too far south for contact between Germani and Celts at so early a date. Much more probable (even though there may be no proof) is the area to which we have had our attention drawn more than once, the eastern range of the Mittelgebirge, with the Volcae settled perhaps east of the Boii, in Moravia rather than Slovakia, but certainly not too much further eastwards (in what later became EG territory) if we are to account for the absence of the word *Walh- in Gothic, as opposed to WG. (There may have been no occasion to use such a word in Wufila's Bible, but the word is also significantly absent from the formation of Gothic personal names, again in contrast to WG.) Locating the Volcae in this area also sheds further light on Caesar's remark on the land in which the Volcae were settled. His reference to the wealth of this region (fertilissima Germaniae... loca) may mean not only agriculture but perhaps also the mineral deposits there, whilst the renown attributed to the Volcae in peace and war (summamque... iustitiam et bellicae laudis opinionem) rested on their skill in metallurgy and the quality of their weapons. On both scores they attracted the attention of their northern neighbours.
"In different ways and with different implications these three geographical terms (Bohemia, Bavaria and Wales) are thus all fosslised survivals of the encounter between Celts and Germani which add valuable new material to the often uncertain evidence of loanwords" (Green 159-163).
[EDIT] There is a good deal of loanword traffic between Celtic and Germanic- did you want details? it's very interesting- most loanword traffic is rooted in trade but specific Celtic words for metallurgy ('iron', 'lead', 'wire') and military technology ('byrnie') are significant, with some military/political (Go.
reiks, OHG
ambaht) or others plain superior technology like 'leech'-craft. Interestingly enough, Germanic peoples probably transmitted steppe culture (Iranian/Sarmatian possibly through Bastarnae/Sciri or Thracian, possibly the Zarubintsy culture): loanwords such as 'breeches' and 'mare' (as term for warhorse, speedier than draft)