The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a limited range on Friday.
Although both German and Eurozone Gross Domestic Product eclipsed forecast growth, the Euro is generally holding steady versus the majority of its most traded currency rivals. The lack of acceleration is as a result of disappointing Greek growth as traders speculate that Greek officials will use the data as fodder to exit the Eurozone.
The Pound Sterling, meanwhile, is mostly static versus its major peers after construction data produced mixed results. However, Thursday’s surge after the Bank of England (BoE) hinted towards a rate hike before expectations has kept Sterling in a position of strength.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7415.
Euro (EUR) Exchange Rate Stumbles on Greek Growth
As described above, the single currency was unable to advance against most of its major peers despite positive results from German and Eurozone growth. German GDP saw non-seasonally adjusted fourth quarter growth of 1.6%, bettering estimates of 1.2%. Eurozone GDP saw seasonally adjusted fourth quarter growth of 0.9%, eclipsing the market consensus of 0.8% growth.
The lack of Euro movement can be attributed to poor data out of Greece counteracting the positive results described above. On a yearly basis, preliminary Greek growth dropped from 1.9% to 1.7%, missing estimated growth of 2.0%. Some speculate that Greek government officials will highlight the difference between German and Greek growth and use the disparity as fodder for a Grexit, with the political situation blamed for the slow pace of expansion.
A foreign exchange trader stated; ‘The fall in Greek Q4 GDP is a vivid example of how the economy is connected to politics.’
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low of 0.7402 today.
Pound Sterling (GBP) Exchange Rate Holding Steady on Mixed Data
British construction data produced a mixed set of results on Friday, causing the Pound to hold relatively steady versus the majority of its most traded currency competitors. Year-on-year seasonally adjusted Construction Output met with the median market forecast of a drop from 5.8% to 5.5%. On a monthly basis, however, output only grew from by 0.4% following the previous month’s -1.8% contraction, missing estimates of a 2.7% rise.
After comments made by BoE Governor Mark Carney on Thursday, regarding the potential for a sooner-than-expected rate hike, the Pound is generally holding in a position of strength. A succession of reasonably positive UK data has boosted speculation that the BoE will be one of the first, if the not the first, central banks to raise the cash rate.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Steady
Given the lack of influential data to drive changes, and with continued uncertainties regarding Greece’s future in the Eurozone, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold steady for the remainder of Friday.
The coming week should see plenty of EUR/GBP volatility, not least with the Greek debt crisis dominating trader focus.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high today of 0.7434.