Euro to Pound Sterling Exchange Rate Forecast: EUR/GBP Heading for New Eight-Year Low on Bullish Pound as Euro Softens
Unease in Greece Depreciates the Common Currency (EUR) Further, Rally Still Possible on Today’s Consumer Price Index
Threats from Greek Prime Minister Alexis Tsipras to call early elections should his party fail to become more supportive of creditor-sanctioned austerity measures hurt the Euro (EUR) yesterday, continuing to push the EUR/GBP exchange rate down. The common currency could however rally today with the hope of a positive result for the German Consumer Price Index.
Presently the EUR/GBP pairing is trending in the range of 0.7028.
Investors are watching the Greek bailout talks closely today as the Pound (GBP) continues to gain on yesterday’s positive GDP report.
Sterling Stayed Strong on UK GDP Report, Greek Plans Depreciated Euro over Positive IFO Assessment: GBP/EUR Higher
Although the Euro (EUR) opened the week quite positively it was not long before its fortunes began to decline, in particular against close rival Sterling (GBP). The Greek crisis continues to overshadow the common currency as details of a so-called ‘Plan B’, spearheaded by former finance minister Yanis Varoufakis, came to light. Proving that the leadership of the Hellenic nation had been definitively preparing for the occurrence of a Grexit, by creating a parallel banking system able to quickly shift the economy back to the Drachma from the Euro, the news led to a dovish turn for Euro exchange rates. Dropping from a fortnightly peak of 0.7151, prompted by the positive German IFO assessments, the EUR/GBP pairing went down to 0.7073 yesterday.
The UK’s as-expected second quarter GDP report, 0.7% for quarter-on-quarter and 2.6% for year-on-year respectively, was quick to increase confidence in the Pound and prompt a further rally. As the positive data leads to speculation that the Bank of England (BoE) will choose to raise interest rates sooner rather than later the currency’s value is naturally seeing a good boost.
EUR/GBP Trending Lower in Spite of Target German Consumer Confidence, Pound (GBP) Supported by Mortgage Figure Improvements
This morning’s Consumer Confidence Survey for Germany was revealed to be as expected, remaining at a consistent 10.1. Failing to particularly boost the EUR/GBP exchange rate this represented a missed opportunity for the Euro to rally in the wake of continuing rumbles from Greece. No doubt contributing to the figure’s relative lack of impact, Greek bailout talks were slightly impeded by the absence of the head of the negotiating team from the IMF. Although this does not represent a major setback any and all wobbles with regards to progress on the nation’s economic recovery will undoubtedly lead to increased caution from traders.
Mortgage lending and approval figures for June from the UK both indicated improvement and a greater level of confidence amongst the nation’s banking institutions, with lending rising from 2.4 to 2.6 billion and approvals beating the forecast 64.3 thousand to instead come in at 66.58 thousand. Consequently another strong rally from the Pound saw the EUR/GBP pairing soon dip to a low of 0.7072 as it returns to a downwards trend.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Imminent German Unemployment and Inflation Figures Hold Hopes for Euro Boost
With several important data releases from the Eurozone due in the coming days there is good potential for the common currency to begin another resurgence. A strong showing in either Germany’s Unemployment figures or preliminary Inflation Rates would have a high chance of restoring faith in the Euro. However, the inverse is just as true and another disappointment could easily push the EUR/GBP exchange rate down towards a fresh eight-year low.
On the other hand, following the plethora of figures announced in the first half of this week, the UK is expecting less in the way of further data in the next few days. The Consumer Confidence survey and nationwide housing prices for July are upcoming, however, with expected or better numbers likely to continue the Pound’s current bullish run.
As of writing the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7057.