Newsflash – Euro Bolstered by Greek News
The Euro advanced on a number of its rivals on Friday in response to the news that Greece didn’t default on its debt repayment to the International Monetary Fund (IMF) but postponed it until the end of the month.
The development, coupled with positive Factory Order data for Germany, gave the common currency a boost as Greece now has longer to reach an accord with its creditors.
The BoE’s inflation report is likely to cause additional GBP/EUR exchange rate movement in the hours ahead.
Newsflash – Euro to Pound Sterling (EUR/GBP) Exchange Rate Steady after BoE Announcement
The Euro to Pound Sterling (EUR/GBP) exchange rate was little changed as the Bank of England (BoE) acted in accordance with expectations and left interest rates on hold after its latest policy meeting.
After the decision economist James Knightley noted; ‘The Bank of England has left monetary policy unchanged as universally expected given the fact that inflation is in negative territory and growth was a disappointing 0.3% in Q1 2015. It is possible that the minutes will subsequently show the two relative hawks on the Monetary Policy Committee, Martin Weale and Ian McCafferty, are getting closer to voting for a rate rise given the ongoing strengthening of the labour market and rising wages.’
Over in Greece it has been reported that the government will be holding an emergency cabinet meeting later today in order to discuss the latest developments. Any news relating to the nation’s bailout agreement is likely to have an impact on EUR/GBP trading.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7355
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3620
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced on Wednesday as the Eurozone released positive data and Greece appeared closer to reaching an accord with its creditors; the common currency held gains on Thursday despite Greece rejecting the latest bailout proposal.
Euro to Pound Sterling (EUR/GBP) Exchange Rate News: Euro Supported by Greek Bailout Optimism, ECB Comments, Eurozone Retail Sales & Unemployment Data
The Euro advanced by a cent against the Pound yesterday as the Greek situation finally seemed to be progressing and the European Central Bank (ECB) asserted that the rate of inflation in the currency bloc was likely to accelerate more rapidly than previously forecast.
The news that the rate of unemployment in the Eurozone fell to 11.1% while the pace of retail sales growth increased was also Euro-supportive and the common currency gained on a number of its counterparts.
Further upbeat Euro sentiment came in the form of revised growth expectations for the Eurozone from the OECD. The Eurozone had been expected to expand by 1.1% in 2015, but region is now predicted to record growth of 1.4%.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Pound Declines on Soft Services PMI, Bank of England (BoE) Expected to Leave Interest Rates on Hold
While the Euro was bolstered by positive news from the Eurozone, the Pound tumbled following the publication of a disappointing Markit Services PMI report for the UK.
With the pace of service sector output slowing by considerably more than anticipated, the odds of the Bank of England (BoE) increasing interest rates this year fell and the Pound fell with them.
The Pound Sterling to Euro (GBP/EUR) exchange rate slumped to an almost one-month low and continues trending in the region of 1.3557.
The Bank of England (BoE) is expected to leave interest rates and quantitative easing unchanged at today’s gathering, so the decision is unlikely to have much impact on GBP/EUR trading.
Euro (EUR) Exchange Rate Forecast to Gain if Greece is Granted Bailout Funds and Avoids Default
Greece may have rejected the bailout proposal put forward by its creditors, but official sources indicate that the nation has made progress in discussions and is putting forward a counter offer based on the concessions reached during last night’s discussions.
According to Reuters Editor Hugo Dixon, there are four ways this situation could be resolved; ‘1. Tsipras agrees deal with creditors, can’t sell to Syriza hardliners, calls snap elections and wins. Good. 2. Tsipras agrees deal with creditors, keeps Syriza hard lines on board, fails to implement properly and crisis returns in a few months. Poor. 3. Tsipras can’t do deal, defaults, and after capital controls imposed hands over to national salvation government which sues for peace. Bad. 4. Tsipras can’t do deal, defaults, keeps power (maybe after new elections) and continues confrontation. Terrible.’
If Greece does manage to make an agreement today the nation will be granted emergency bailout funds just in time to make tomorrow’s repayment to the International Monetary Fund (IMF).
By avoiding a much-feared bailout Greece is far more likely to keep its place in the Eurozone and the Euro is likely to benefit as a result of the reduced uncertainty.
The Euro was little affected by the news that
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7386
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Experience Volatility after BoE Inflation Report, Eurozone GDP Data; Greek IMF Payment Due
At the close of the week we can expect a final flurry of Pound Sterling to Euro (GBP/EUR) exchange rate movement to occur in response to the Bank of England’s (BoE) highly influential inflation report.
If the central bank’s inflation expectations for the next 12 months are higher, the BoE may consider bringing forward its first adjustment of borrowing rates.
Hawkish commentary from the BoE and any intimation to this effect would be Pound-supportive.
However, the Euro’s uptrend against the Pound is likely to continue if Greece doesn’t default on its payment to the International Monetary Fund (IMF). If an agreement between the Hellenic nation and its creditors is in place before tomorrow, Greece will have the funds it needs to meet its debt obligation.
Similarly, the Euro could be bolstered by first quarter growth data for the currency bloc. Previous estimates saw the Eurozone economy expanding by 0.4% on the quarter and 1.0% on the year in the first three months of 2015.
Upward adjustments would be well received by investors, but even if the numbers are left unchanged they would confirm that the Eurozone expanded by more than the UK on a quarter-on-quarter basis.
Germany is also due to publish Factory Orders data tomorrow. Factory Orders are believed to have risen by 0.5% on the month in April but fallen by -0.6% on the year.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7374, the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8822, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1335 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3559