Euro to British Pound (EUR/GBP) Exchange Rate Poised for Volatility
Ahead of another emergency gathering of Eurogroup leaders, the Euro to British Pound (EUR/GBP) exchange rate was trading in the region of 0.7373.
A mixed bag of Manufacturing/Services and Composite PMI’s for the Eurozone and its largest economies had little impact on Euro trading as investors fixated on the latest Greek debt discussions.
If Greece isn’t able to reach an agreement with its creditors this time out, ‘Grexit’ bets will rise and the Euro could tumble to fresh lows.
EUR/GBP Exchange Rate Slightly Stronger
After falling to a fresh 7-year low against the Pound off the back of unexpectedly strong UK employment figures, the Euro recovered some of its losses as European trading kicked off on Thursday.
While today’s UK data is comparatively low-impact, the EUR/GBP exchange rate could fluctuate in response to the release of minutes from the European Central Bank’s last meeting.
The Eurozone’s Consumer Confidence data will also be of interest.
The Euro to British Pound (EUR/GBP) exchange rate is currently trading in the region of 0.7399
EUR/GBP Exchange Rate Down 0.7%
Following the publication of the UK’s employment figures, the Euro to Pound Sterling (EUR/GBP) exchange rate fell by over 0.7%.
The jobs stats were entirely upbeat, showing an employment increase of 103,000 in the three months through December and a 2.1% increase in average earnings.
The nation’s unemployment rate also fell from 5.8% to 5.7% instead of remaining unchanged as forecast.
As the data supports the case for a sooner-rather-than-later Bank of England interest rate increase, the Pound strengthened across the board after the data was released.
The report saw Prime Minister David Cameron tweet; ‘The highest employment and lowest inflation rates are a key moment in our recovery. Let’s not put it at risk with Ed Miliband and Labour’.
The Euro to British Pound (EUR/GBP) exchange rate fell to a low of 0.7361
The Euro to British Pound (EUR/GBP) exchange rate may give up yesterday’s gains if today’s report shows an unexpected decline in unemployment.
EUR/GBP Exchange Rate Strengthens on Hopes of Greek Bailout Extension
Over the course of yesterday’s European session, the Euro to British Pound (EUR/GBP) exchange rate advanced by around 90 pips thanks to a number of factors.
Demand for the Pound was undermined after the UK’s headline inflation rate was shown to have slowed to beyond a 25-year low in January.
Although an increase in the core inflation rate limited Sterling’s declines against peers like the US Dollar, bets that the Bank of England (BoE) might delay an interest rate hike as a result of lower inflation saw the EUR/GBP pairing climb.
The Euro to British Pound (EUR/GBP) exchange rate hit a low of 0.7413
The Euro’s uptrend against the British Pound was also aided by some upbeat economic sentiment data for Germany and the Eurozone.
Encouraging ZEW reports were then followed by speculation that the Greek government might request a six-month extension of its current bailout programme in order to have the time needed to hash out a new deal.
Officials have been quoted as saying that the Syriza-led government intends to request an extension later today.
Although Prime Minister Alexis Tsipras has asserted that Greece will not concede to ‘psychological blackmail’, the nation is due to run out of money at the end of this month and an extension to the current deal is looking like its only option.
As stated by one industry expert; ‘Posturing aside, the differences between the positions of the Greek government and the Euroarea are not so difficult to bridge. And both sides share a common interest in preventing the worst.’
Euro to British Pound (EUR/GBP) Exchange Rate Forecast
If an extension deal is brokered later today, the Euro could rally.
The Euro to British Pound (EUR/GBP) exchange rate hit a high of 0.7432
Movement in the Euro to British Pound (EUR/GBP) currency pair may also be caused by the UK’s latest employment figures.
The jobs data is expected to show that the UK economy added 50,000 positions in the three months through September, keeping the unemployment rate at a 6-year low of 5.8%.
However, if the jobs gain is stronger than this and joblessness declines, the Pound could recover its recent losses against the Euro.
Investors will also be keeping a sharp eye on average earnings figures, as they are tipped to have increased by 1.7% in the period, year-on-year, unchanged from the number recorded in the three months through November.
The Eurozone is set to publish Construction Output data at 10:00 GMT, which may have a modest impact.
The British Pound to Euro (GBP/EUR) exchange rate was trending in the region of 1.3467
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1403
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8765
The Euro to British Pound (EUR/GBP) exchange rate was trending in the region of 0.7424