The Euro to Pound Sterling (EUR/GBP) exchange rate has improved marginally since earlier and is now trending in a narrow range.
Greek Bailout optimism Dampened by Turbulence in Hellenic Parliament
The Euro (EUR) is at a stalemate to the Pound Sterling (EUR/GBP) today, as positive and negative factors have contributed to equalise its relationship with the Pound (GBP). The initial optimism that came from German Chancellor Angela Merkel weighing in on voting in the Bundestag was offset by the news that Greek Prime Minister Alexis Tsipras will likely be holding a vote of confidence after the agreement is reached.
Tsipras’ popularity has waned considerably among large parts of his party, which is understandable as he was elected on an anti-austerity drive but has effectively guaranteed years more austerity for his country by agreeing to the bailout conditions. If a Vote of No Confidence is called, it is highly likely that Tsipras’ successor will not be conducive to the bailout, and may endeavour to derail the bailout terms however they can. Such an outcome would, naturally, reduce confidence in the Euro considerably.
The Euro to Pound Sterling (EUR/GBP) exchange rate declined today as the Pound (GBP) was supported by an article from Bank of England (BoE) Monetary Policy Committee (MPC) member Kristin Forbes.
Forbes Raises Sterling Confidence, Euro stable as Greek Bailout Deal Nears Completion
The Euro (EUR) has fallen by -0.4% against the Pound Sterling (EUR/GBP) today, as confidence in the Pound (GBP) rose following the publication of Forbes’ article. The Euro has made varied gains elsewhere; these come as lingering doubts over the Greek bailout persist, despite receiving the approval of Eurozone finance ministers on Friday. The bailout measure still needs approval from European parliaments this week before it is finalised.
This comes as debates rage over whether or not Greece should receive debt relief to help with its economic recovery. The International Monetary Fund (IMF) is in favour of such a measure, but some German MPs are against it, and are likely to make their objections known when it comes to voting.
The Pound’s gain against the Euro (GBP/EUR) came with Forbes’ article stating that a UK interest rate increase would still be likely, and that if this did not take place before UK inflation reached 2%, ‘Waiting too long would risk undermining the recovery’.
The Euro (EUR) is still in flux following the Greek bailout negotiations on Friday, and the aftershock of the Eurogroup meeting is likely to dictate the common currency’s faring against the Pound (GBP) for the coming week, if not further ahead.
Euro to Pound Sterling (EUR/GBP) Exchange Rate News: One Deadline Replaced with Another as ECB Repayment Towers over Greece
The Euro (EUR) experienced what can be classified as a response to false hope last week; the single currency progressively rose in value from Monday through to Thursday. However, this rise was quickly turned upside down when now-familiar concerns over the sustainability of a third Greek bailout in a 5-year period surfaced, sending the Euro down by -0.4% against the Pound (EUR/GBP). The overall 0.3% Eurozone GDP growth recorded on Friday failed to sway opinions towards the Euro, as this result fell 0.1% short of predictions. As of Friday, the Euro was in a -0.4% decline against the Pound (EUR/GBP).
For the Greek parliament, it might feel like there is no light at the end of the tunnel, after one week of tense, fraught negotiations, this week sees a €3.2bn repayment due to the European Central Bank on Thursday. This is to be followed with a further approximate €1.4bn due to be repaid in the first week of September. For context, part of this second impending repayment is due to the IMF as part of the first Greek bailout that took place in 2010.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Saw Sterling (GBP) Regain Despite Unemployment Disappointment
Although the Pound (GBP) started last week in highly unfavourable circumstances, it finished with an advantage of 0.4% against the Euro (GBP/EUR). As with most other rivals to the Euro (EUR), the Pound declined on Monday through to Thursday last week, as the Euro rose bullishly on waves of optimism about a quick, clean bailout agreement. However, as significant concerns surfaced about whether the Third Economic Adjustment Programme would ultimately benefit Greece, the common currency fell substantially against the Pound (and others).
The Pound wasn’t helped by the UK Employment Change figure for the three months to the end of June, as the results on Wednesday saw a crushing loss of -63K jobs over the period. The UK monthly and yearly Construction Output results for June (released on Friday) also dampened optimism in the Pound, as they too fell below forecasts, although unlike the Employment Change, these results indicated slight growth in their fields.
Euro to Pound Sterling Exchange Rate Forecast: Eurozone Confidence Scores and UK CPI Indices to Decide EUR/GBP Victor
Amidst further fallout from events in Brussels, the Euro (EUR) is expected to be impacted most by the German and Eurozone Consumer Confidence Scores, released on Friday. Forecasts have predicted a very small contraction of -0.1 for the German score, but a worse drop of -8.3 for the Eurozone figure. For the Pound (GBP), the UK annual July Consumer Price Indices (out on Tuesday) and the July Retails Sales figures released on Thursday are sure to have a noticeable impact on Sterling’s prospects. Retail Sales predictions are more definite (and positive) than inflation predictions, with growth being predicted on the monthly and yearly measures.
Current EUR, GBP Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7122 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4047 today.