Conservative Party Collapse Leaves Anti-Austerity Syriza Party Without Opposition
Greece’s New Democracy party is in disarray today after computer failures meant that leadership elections on Sunday couldn’t take place. The party is currently leaderless after Vagelis Meimarakis stepped down on Tuesday.
The Hellenic nation has been further rocked by a timed bomb blast at the headquarters of the Greek business federation. The explosion, which did not cause any casualties, has prompted fears that anti-austerity anarchists are planning a wave of violence.
A surprisingly positive Autumn Statement, in which George Osbourne promised to protect police spending, give more money to the NHS and increase capital funding for transport projects, has seen Pound Sterling trading up against the majority of the major currencies. The British asset previously softened as investors feared the worst.
The EUR/GBP exchange rate is currently trending down -0.4% in the region of 0.7030.
The Euro to Pound Sterling (EUR/GBP) exchange rate is advancing on the back of positive Eurozone data released yesterday and this morning. Pound Sterling is retreating amid investor uncertainty over the future of UK borrowing.
EUR/GBP Exchange Rate Uptrend Continues Despite Threat of Additional Stimulus
The Euro has started the day trending up 0.2% against Pound Sterling as investors fear the contents of the next Autumn Statement. Markit PMIs – a ‘flash’ estimate of economic growth based upon around 85% of the total data available – have shown that the Eurozone economy experienced the fastest rate of expansion in over four years.
The Institute for Economic Research (IFO) surveys show that the sentiment towards the German economy is growing. The Business Climate survey rose from 108.2 to 109.0, while the Current Assessment increased 1.7 points to 113.4. Expectations also rose from 103.8 to 104.7.
Today’s non-seasonally adjusted German Gross Domestic Product has continued to grow at the same level of 1.8% as the same period the year before. While the recent economic releases are good for the flagging Euro, the chances of additional stimulus from the European Central Bank (ECB) are still high, with spare capacity and a downward pressure on prices still affecting the Eurozone.
The EUR/GBP exchange rate is currently trending in the region of 0.7049.
GBP/EUR Exchange Rate Softens as £4 Billion Deficit Sparks Fears Over Austerity Measures
Pound Sterling is currently falling against the majority of currencies following news of the biggest budget deficit since the UK was in recession. The gap in public finances was 16% higher than in October 2014, casting doubt over the ability of the Exchequer to meet its forecast borrowing figures for the 2014/15 fiscal year.
The Office for Budget Responsibility (OBR) had predicted that the government’s spending plans would result in a 23% reduction in borrowing during this fiscal year. So far the current figure is just 11% lower than last year’s £90.1 billion. Experts predict George Osbourne will need to cut total borrowing by nearly half for the remainder of the fiscal year in order to meet this year’s borrowing target of £69.5 billion.
The Chancellor has a target budget surplus of £10 billion by the 2019/20 fiscal year, however the OBR warns that Osbourne will need to find an additional £11 billion in order to meet that target: the same amount he is forecast to overshoot this year’s target by.
The GBP/EUR exchange rate is currently trading between 1.4166 and 1.4254.
EUR/GBP Exchange Rate Forecast: BoE’s Carney Testifies Inflation Report Today
Pound Sterling could be hit by further dovish remarks from Bank of England (BoE) Governor Mark Carney, who is testifying to lawmakers this morning regarding the November 5th Inflation Report. The report saw policymaker change attitudes, from having previously suggested interest rates were heading higher to claiming the economy wasn’t ready to handle increased rates. Carney’s comments are expected to confirm that the BoE has no intention of raising interest rates in the near future, which will see Pound Sterling fall further against the Euro (GBP/EUR).
The EUR/GBP exchange rate is currently trending between 0.7013 and 0.7053.