After intense deliberation, members of the Greek parliament have voted to approve the third Greek bailout deal this morning, although Prime Minister Alexis Tsipras may now face a vote of confidence after rebellion in the Syriza party.
UK Employment Data Boosted EUR/GBP Exchange Rate to One-Month Best, with Mixed Optimism over the Prospects of Greek Proposals
A wave of optimism buoyed the common currency on Tuesday, as Greek finance minister Euclid Tsakalotos confirmed that a third bailout package had been agreed ‘in principle’ with the nation’s creditors. However, ministers from Finland and Germany were quick to make it clear that they remained less than convinced by the finer details of the proposal and whether the deal will prove sustainable for the economy of Greece.
Wednesday’s employment figures for the UK were unable to give the Pound (GBP) its much-needed rally. The Employment Change declined by -63,000, rather than the anticipated figure of -55,000, to throw further doubt on the shorter-term prospects of a Bank of England (BoE) interest rate rise. Consequently the EUR/GBP exchange rate struck a fresh monthly high of 0.7161.
Greek Parliament Votes in Favour of Bailout Today as Slowing Eurozone GDPs Undercut Euro (EUR) Strength
Following a long night of tired and often heated debate the Greek parliament voted 222-64 in favour of approving the proposed bailout this morning, with 11 voters abstaining. Although this marks the first step towards securing funds that will help the country meet the 20th August European Central Bank (ECB) repayment deadline, the result was not an entirely positive one. Rebellion in Prime Minister Alexis Tsipras’ Syriza party has escalated to the point of his narrowly losing the majority, with reports suggesting that a confidence vote is imminent. Bad news as the prospect of snap elections begins to loom larger. The meeting of Eurozone finance ministers, scheduled to take place this afternoon, to sign off on the deal may now prove to be an even greater sticking point in light of this result.
Eurozone GDP figures were less than impressive today, with the bloc’s economy growing by a slightly weaker than expected 0.3% after nations such as Germany, France and Italy posted disappointing numbers. Finland remains in recession, with Greece surprisingly outperforming a number of other members. Although this prompted a narrow decline in the EUR/GBP exchange rate it is likely to be today’s ongoing bailout developments that ultimately drive the pairing.
Construction Output for the UK, while falling short of expectations, did show something of an improvement in growth this morning. Not enough to spur a strong Sterling rally, the figure did nevertheless help keep the EUR/GBP exchange rate in a minor downtrend.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Potential Rally on Horizon for Pound as Bailout News Continues Driving Single Currency Movement
In lieu of any particularly impactful data releases in the first half of next week it seems certain that whatever progress, or lack thereof, the Greek bailout package continues to make will dominate the outlook of the single currency. With the ECB deadline now less than seven days away any delays could prove disastrous.
Tuesday may see a significant resurgence for Sterling as the UK’s Consumer Price Index is released. A strong showing here could be enough to end the persistent dovish influence of last week’s BoE Rate Decision and pull down the EUR/GBP pairing.
Current EUR, GBP Exchange Rates
At time of writing the Euro to Pound Sterling (EUR/GBP) exchange rate is in a narrow downtrend at 0.7140, while the Pound Sterling to Euro (GBP/EUR) pairing is in the range of 1.4004.