Potential Ratification Complications for the Greek Bailout Weigh Down on the Euro (EUR) Today
Today marks the emergency session of Greek parliament intended to ratify the current bailout proposal, although it is anticipated that it will not be a fast pass. Friday’s meeting of Eurozone finance ministers remains a potential sticking point, as German officials remain vocal in their doubts. Some of this concern appears to be starting to catch this morning, as the EUR/GBP rate has entered a downtrend around 0.7110.
Growing Reticence over Bailout Deal from Germans has Potential to Damage Euro (EUR) as European Central Bank Repayment Deadline Approaches
Germany has become even more vocal in its doubts regarding the bailout of Greece this afternoon, in spite of Greek Prime Minister Alexis Tsipras continuing to express optimism. There seems little doubt that the details of the deal will remain something of a point of contention over the next week, with Friday’s meeting of European finance ministers increasingly looking to be a potential sticking point for the agreement. Nevertheless, the EUR/GBP exchange rate is currently trending positively at 0.7160.
Continuing progress on the third bailout of Greece has helped keep the common currency (EUR) strong despite worse-than-anticipated Eurozone Industrial Production as Sterling (GBP) sees further disappointment from the UK employment data.
Agreement on Bailout for Greece Encouraged Bullish Outlook for the Euro (EUR) as EUR/GBP Exchange Rate Climbs
The dominant influence on the Euro (EUR) yesterday was the ‘in principle’ agreement reached between the Greek government and its creditors regarding the Hellenic nation’s third bailout. Officials in Athens appeared generally optimistic that the proposals can be approved and the first disbursement received before the 20th August repayment to the European Central Bank (ECB). Naturally the EUR/GBP exchange rate climbed to a fortnightly high of 0.7109.
With no notable data releases from the UK in the first half of the week, the movement was very much driven by the news from the Eurozone and by the continued dovish influence of ‘Super Thursday’. Traders’ disappointment over the receding prospect of an interest rate rise has evidently remained prominent even after the weekend, keeping Sterling (GBP) relatively stagnant.
Employment Data Fails to Rally the Pound (GBP), EUR/GBP Exchange Rate Strikes Monthly High Regardless of Eurozone Industrial Production Faltering
Traders were proven correct in their earlier cautiousness this morning after the UK employment data failed to give the Pound enough fuel for a rally. The Unemployment Rate remained steady at 5.6%, while Employment Change exceeded forecasts for a decline of -55,000 to fall by -63,000. The EUR/GBP exchange rate was quick to capitalise on this apparently bearish data, pushing the pairing to a fresh monthly high of 0.7162.
However, as these are rolling three month figures the effects of the UK election in May are being blamed for negating the more positive trends towards the end of the timeframe in June. Consequently traders may become more confident later, as analysts continue to predict that the BoE rate rise will come in the first quarter of the next year.
Year-on-year Industrial Production for the Eurozone was revealed to be less than positive, hitting 1.2% to slip further away from the previous month’s figure. The first significant blow to the common currency this week, this shortfall could be overshadowed by the continuing reports from Greece, not least because it was likely the economic unrest of that particular nation that had held the bloc back on this figure.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Potential Holdups for Greek Bailout May Stall the Single Currency’s Hawkish Run
Inflation and GDP Growth Rates stand to boost the Euro further, should these buck the week’s trend for data releases and prove positive. Any trouble for the passage of the Greek deal could put a significant dampener on the bullish currency, particularly as Finnish and German ministers have proven sceptical to the current state of the agreement.
Friday’s UK Construction Output is the only remaining economic release of the week, and seems unlikely to hold particular hope of a rally for the soft Pound. However, in spite of its currently bearish momentum Sterling could still see a rise as a result of any significant Euro weakness.
Current EUR, GBP Exchange Rates
At time of writing the Euro to Pound Sterling (EUR/GBP) exchange rate was moving strongly at 0.7145, with the Pound Sterling to Euro (GBP/EUR) pairing remains stuck in a downtrend around 1.3995.