Euro to Pound Sterling (EUR/GBP) Exchange Rate Gains a UK growth Falls Short
As the European session progressed and the UK economy was shown to have expanded by just 0.5% on a quarter-on-quarter basis in Q4, the Euro consolidated gains against the Pound.
Sterling declines were a little restrained by the news that the UK recorded its fastest pace of annual growth since 2007 last year.
The EUR/GBP pairing is likely to continue trending higher until tomorrow when Germany publishes its GfK Consumer Confidence Survey.
If this report surprises to the upside, as the IFO gauges did yesterday, the Euro could push higher against the Pound.
EUR/GBP Exchange Rate Trends at 0.7485
Ahead of the publication of the UK’s GDP data for the fourth quarter, the Euro to Pound Sterling (EUR/GBP) exchange rate was trading 0.4% higher having recovered the losses incurred in the wake of the Greek general election.
Soft UK growth figures could see the EUR/GBP pairing extend gains in the hours ahead.
EUR/GBP Exchange Rate Climbs almost 0.3%
The Euro to Pound Sterling (EUR/GBP) exchange rate recovered around 0.3% as the European session progressed on Monday and Germany published encouraging IFO reports.
The IFO Business Climate gauge advanced from 105.5 to 106.7 in January, beating expectations for a reading of 106.5.
Similarly, the IFO Current Assessment index jumped to 111.7 from 110 in December.
The news that Syriza had to form a coalition after failing to secure the outright majority also reduced Grexit concerns and lent the Euro support.
In the view of strategist Alessandro Bee; ‘Syriza’s win won’t be as bad for markets now as it could have been a few months ago. Tsipras is less aggressive and willing to negotiate. The result will affect sentiment on Greece, but in a broader European context it’s just a blip. Markets are still in a risk-on mode and any news is dwarfed by the ECB stimulus programme’.
Meanwhile, another industry expert observed that the Euro ‘moved such a long distance over a short period of time that maybe some people think it’s time to lighten positions. We had a fairly strong assumption of who was going to win the election, so the [negotiations between Greece and its creditors] is the key issue.’
However, after a Bank of England official implied that UK interest rates could be increased more swiftly than currently projected, the Pound gained and the Euro went back to trading around the day’s opening levels.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7480.
The Euro to Pound Sterling (EUR/GBP) exchange rate declined on Sunday as anti-austerity party Syriza won the hotly-anticipated Greek election.
EUR/GBP Exchange Rate to Fluctuate on ‘Grexit’ Bets
After Syriza was announced as the victor of the Greek vote, the Euro to Pound Sterling (EUR/GBP) exchange rate declined.
The Euro also fell to its lowest level since 2003 against the US Dollar as investors bet that the new leadership could prompt political upheaval across Europe.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7424
EUR/USD fell to 1.1098 against the ‘Greenback’ before an upward correction saw it trading in the region of 1.1203.
According to strategist Ben Pedley; ‘What we do think this outcome brings is once again volatility back to the fore. We think Greek exit is a very, very low probability or possibility.’
The common currency pared some of its declines after it emerged that Syriza had just fallen short of obtaining a majority which would allow them to govern the country alone.
A coalition reduces the odds of the party pushing for a complete overhaul of the Greek austerity measures so economists will be taking a keen interest in the party negotiations.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7488
In the hours ahead the Euro to Pound Sterling (EUR/GBP) exchange rate could fluctuate in response to the German IFO business climate/current assessment reports.
The UK’s BBA Loans for House Purchase figures will also be of interest.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
As the week progresses, the direction taken by the EUR/GBP pair will be dictated by the UK’s Gross Domestic Product figures for the fourth quarter, the German GfK Consumer Confidence report, the Confederation of British Industry reported sales numbers and German/Eurozone CPI and unemployment figures.
Poor UK growth figures could help the Euro recover some of its recent losses against the Pound.
Developments in the Greek political situation will also be of interest.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7485
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3355
The Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1240
The US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8895