Promising Bailout Agreement for Greece Boosts Single Currency (EUR) Today, EUR/GBP Rises in Spite of Cautions
Good news for Greece and the Euro (EUR) this morning, as an agreement with creditors to secure a third bailout worth 86 billion Euros was confirmed. While this saw the EUR/GBP exchange rate quickly climb back to 0.7070 the deal still requires ratification by the Greek parliament and a vetting by the finance ministers of the Eurozone to become binding. Pundits are likely to remain optimistic but cautious regarding this development, particularly as some European finance ministers appear to be remaining skeptical with regards to the timescale needed for the final approval of a deal.
Lowering Investor Confidence Deals Blow to the Euro (EUR), GBP/EUR Exchange Rate Continues Sluggish Regardless
Disappointment for the Eurozone was the result of the Sentix Investor Confidence index for August this morning, which not only fell short of forecast but also of the previous month’s figure. Coming in at 18.4, rather than 20.3 as expected, this certainly seems to indicate that optimism is not currently high within the Eurozone. This also does not bode especially well for tomorrow’s ZEW Economic Sentiment Index results, although at present the GBP/EUR exchange rate has made only limited gains in consequence.
Positive comments from the Greek bailout discussions bolster the Euro (EUR) today as Sterling (GBP) remains sluggish after last week’s underwhelming Bank of England reports.
Dovish UK Interest Rate Decision Gave Boost to EUR/GBP Exchange Rate in Spite of German Industrial Production Shortfall
After the Bank of England (BoE) data released on Thursday was deemed to be more dovish than anticipated, with the Monetary Policy Committee (MPC) voting 8-1 to maintain interest rates at 0.5% and the possibility of a rate hike before the end of the year all but lost, the Pound (GBP) took something of a hammering from rivals. Exchange rates against the currency jumped across the board, with the EUR/GBP pairing shooting to 0.7039 and continuing to trend upwards throughout the rest of the day.
Friday’s Industrial Production figures for various Eurozone nations were a more mixed bag, with Germany and France reporting contraction while Italy and Spain saw expansion. Anticipating a result of -0.3%, the German decline of -1.4% was significantly disappointing as the Eurozone’s economic centre has undoubtedly begun to show some signs of struggling. However, as the Spanish numbers smashed past expectations of a 2.53% increase to instead report that production grew by 4.5%, the Eurozone as a whole remains relatively on track to meet forecast on the Composite.
Third Bailout for Greece on Horizon to Dispel Further Default Worries, EUR/GBP Exchange Rate Picks Up on Confidence
Today stands to be a relatively slow day for the GBP/EUR exchange rate, with very little in terms of financial data seeing release in the coming hours. However, as optimistic news arises from Greece there could be some movement prompted. Concerns regarding the third bailout of the Hellenic nation, and whether a concrete agreement could be reached before the European Central Bank (ECB) 20th August repayment deadline arrives, have been turning investors away from the common currency (EUR). With claims that even the more sceptical parties among the nation’s creditors are now happy with Greek concessions and willing to go ahead with the deal, the Euro is likely to make further gains against the still-softened Pound today.
Of course, should these reports prove to be overly confident the markets are likely to react just as quickly to pull the single currency back down, and prevent the EUR/GBP exchange rate from continuing to trend towards a fresh weekly high.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Pound Hoping for Rally on Unemployment Figures as Euro Aims to Consolidate Gains
Things will undoubtedly pick up further for the Pound Sterling to Euro (GBP/EUR) exchange rate as the week progresses, with the first big data coming in the form of tomorrow’s ZEW Economic Sentiment Index from Germany. A rebound in economic outlook for the nation could be in store if the numbers prove to be as expected or perhaps better. Further evidence of trouble in the German economy though may provide the Pound with a chance to rally somewhat.
Wednesday, on the other hand, will come with a raft of figures that could strongly benefit Sterling. The UK’s Unemployment Rate and Employment Change numbers may encourage pundits to return to the currency, with a positive showing perhaps eclipsing the continued dovish effect of the BoE release.
Current EUR, GBP Exchange Rates
At time of writing the Euro to Pound Sterling (EUR/GBP) exchange rate was trending up at 0.7087, with the Pound Sterling to Euro (GBP/EUR) pairing moving narrowly around 1.4108.