The Euro to Pound Sterling (EUR/GBP) exchange rate surrendered most of the gains it achieved earlier in the week on Friday as sentiment towards the single currency was weakened by concerns over Greece and as attention turns to next week’s data releases.
Greece is expected to run out of funds on April 8 and pressure is building on both Athens and its creditors in Europe to reach a deal that would see the release of much needed bailout funds. Earlier in the week, the indebted nation had appealed for the European Financial Stability Facility to return €1.2 billion it said it had overspent. The appeal failed; heightening worries, that Greece could go bankrupt and default on its debts.
The Greek government is now expected to present a new detailed list of reform measures on Monday but now faces the challenge of convincing its creditors that it is acting responsibly and that it will follow through with more austerity measures.
‘We have a crisis of confidence with Greece. Something is decided every day and on the next day, it does not apply any more. As for a debt haircut, you can easily calculate this: it brings nothing. The Greek problem will occupy us for some time. I don’t know what will emerge,’ said Austrian Finance Minister Hans Joerg Schelling.
Next week is packed with economic data releases, which will likely lead to mixed trading for the Euro to Pound exchange rate. The movement of the currency pair will depend greatly on whether the Greek situation is resolved.
Next Tuesday is likely to be the most volatile session of the week due to a wealth of high impact data. First up will be German unemployment change data. After that will come the final fourth quarter reading for UK gross domestic product (GDP) and then flash Eurozone inflation data which is forecast to show that prices in the currency bloc fell yet again in March. If that report does come in worse than expected then the Euro is likely to fall, as concerns over deflation will surely increase.
Other events to look out for next week will be the various PMI reports due from both the UK and Eurozone.
The currency pair could be impacted by a fall in risk sentiment if the conflict in the Middle East escalates further.
Data out of the USA could also influence the currency pair, namely Thursday’s ADP Employment change report.
Economists will be keeping an eye on data out of France. If the Eurozone’s second largest economy appears to be improving then it will be a good sign that the overall region is strengthening.
March 30 to April 3 Key Events for EUR/GBP Exchange Rate
Monday March 30
GBP – BoE Consumer Credit
Mortgage Lending/ Approvals
EUR – Consumer Confidence
Tuesday March 31
GBP – GfK Consumer Confidence
GDP Growth Rate Data
EUR – Eurozone Inflation
Wednesday April 1
GBP – Markit/CIPS Manufacturing PMI
EUR – Manufacturing PMI
Thursday April 2
GBP – Markit/CIPS Construction PMI
EUR – German Retail Sales
Friday April 3
EUR- German Factory Orders