Euro (EUR) Bearish Today As Greece Approaches Latest Bailout Deadline
Ahead of this morning’s UK inflationary data the Pound (GBP) is continuing to extend gains against the softened Euro (EUR), trending higher in the range of 1.4241. Nevertheless, sentiment towards Sterling remains relatively muted, as pundits do not expect to see a particularly bullish Consumer Price Index reading today. With the latest stage of the Greek bailout approaching its latest deadline and the chances of monetary loosening from the European Central Bank (ECB) continue to rise the common currency remains bearish.
Eurozone Inflation Bettered Predictions Today as EUR/GBP Exchange Rate Extended Slump
An unexpected uptick in the finalised printing of the October Eurozone Consumer Price Index this morning failed to offer any substantial support to the softened Euro (EUR), as the odds becoming increasingly likely that the European Central Bank (ECB) will opt to expand its quantitative easing program in December. Towards the end of Monday’s European session, the EUR/GBP exchange rate was trending lower in the region of 0.7048.
Demand for the Euro (EUR) is somewhat limited on Monday morning as a result of events over the weekend, leaving the EUR/GBP exchange rate in a slump.
Eurozone GDPs Fell Short of Forecast to Weigh on Euro (EUR) Sentiment in wake of Dovish ECB Comments
Following more dovish words from European Central Bank (ECB) President Mario Draghi, which suggested that the central bank could well expand its quantitative easing program in December, the Euro (EUR) struggled to regain ground ahead of the weekend. The appeal of the common currency was further eroded by the revelation that a number of Eurozone nations had fallen short on their third quarter GDPs. Of particular note was Germany, where growth was only 0.3% on the quarter as opposed to the expected 0.4%, while Italy also failed to see an acceleration in output. Despite France experiencing a surprise uptick, with the figure printing at 0.3% rather than 0.0%, this was not substantial enough to outweigh slowness within the rest of the currency union.
Although Friday also saw the UK’s September Construction Output report demonstrate greater weakness than anticipated, as output on the year contracted by a sharp -1.6%, the Pound (GBP) remained resilient. Traders were uninclined to react particularly to these figures after the strength of the month’s Construction PMI, allowing the EUR/GBP exchange rate to remain on a downtrend.
Pound (GBP) Exchange Rates Held back by Housing Bubble Fears Today as Rightmove House Prices Increase
Overnight the Rightmove House Price index for November showed an increase on the year, climbing from 5.6% to 6.2% to indicate that the UK housing market is continuing to accelerate. However, as investors are increasingly concerned by the possibility that a bubble is developing within the housing sector, this has failed to offer any particularly strong support to the Pound this morning.
Creditors have extended the deadline for Greece to reach an agreement over a controversial change to foreclosure laws, pushing back the final assessment of the nation’s reform progress by Eurogroup ministers until Tuesday. While the involved parties continue to insist that a compromise is in sight this latest setback has weighed on the single currency as the viability of the Hellenic nation’s third bailout program remains under question. Also discouraging Euro trade today is generally more cautious market sentiment, resulting from the terror attacks that befell Paris on Friday.
EUR/GBP Exchange Rate Forecast: German ZEW Economic Sentiment Survey Predicted to Print Lower
Sterling could continue to extend its gains against the common currency tomorrow with the release of the UK’s October Consumer Price Index. Expectations are not altogether positive, however, as inflation is forecast to have remained negative on the year. Should the month-on-month reading show some improvement, though, the Pound could see a boost in demand.
The fate of Greece’s bailout at the latest Eurogroup meeting is likely to be a significant influence on Euro sentiment on Tuesday. As the German ZEW Economic Sentiment Survey is forecast to see a slump in optimism towards the Eurozone’s powerhouse economy the single currency is unlikely to reverse its current bearish form.
Current EUR, GBP Exchange Rates
At time of writing, the Euro to Pound Sterling (EUR/GBP) exchange rate was trending lower in the range of 0.7053, while the Pound Sterling to Euro (GBP/EUR) pairing made gains in the region of 1.4181.