The Euro to Pound Sterling (EUR/GBP) exchange rate is forecast to experience volatility next week as fears over the Greece situation and uncertainty over the outcome of the UK general election are set to weigh on the currency pair.
The Euro to Pound Sterling (EUR/GBP) Exchange Rate Touched a Session Low Of 0.7118 Last Week
As the week ended, the Euro was softer against the Pound as a meeting held in Riga ended with Eurozone finance ministers warning that Greece will get no more aid until it agrees to deliver a complete economic reform plan. In a tense meeting the Greek finance minister, Yanis Varoufakis said that the Syriza led government was willing to compromise.
‘Greece is willing to make compromises to reach a deal on its debt. We want an agreement and we are willing to make compromises to achieve this. The cost of not having a solution would be huge for all of us, Greece and the Eurozone,’ Varoufakis said to reporters after the meeting.
With Athens, sliding closer to a default and bankruptcy the meeting of ministers was derided as another example of kicking the can down the road.
‘A comprehensive and detailed list of reforms is needed. A comprehensive deal is necessary before any disbursement can take place…We are all aware that time is running out. Today we had hoped to hear a positive result and an agreement, so we could take a decision…and we are still far from that,’ said the chair of the Eurogroup Jeroen Dijsselbloem.
The Greek situation is set to continue to weigh on the Euro, as investors grow increasingly concerned over a possible Greek exit from the Eurozone. Unless a deal is reached quickly, Greece will go bust by June.
Looking ahead to next week the Euro could restrict its losses if economic data out of the Eurozone comes in positively and adds to signs that the region’s economy is making a recovery.
Wednesday’s Eurozone confidence and sentiment reports will offer insight on how optimistic businesses, consumers and industry are. The worries over Greece will likely lessen confidence.
The main event for the Euro next week will come on Thursday as the latest Eurozone inflation and unemployment data is released.
Inflation is forecast to have inched higher in April as oil prices have firmed above the $60 per barrel level and as the European Central Banks; quantitative easing programme plays it part.
Unemployment is forecast to have held steady at 11.3% in March.
The Pound Sterling is likely to experience movement in Wednesday’s session due to the release of the latest GDP growth rate data.
With the outcome of the May 7 UK election far from certain the Pound Sterling is likely to see any gains held in check.
Inventors should also keep an eye on geopolitical events such as the Ukraine situation and the conflicts in the Middle East.