GBP/EUR Exchange Rate Above 1.40, Euro Broadly Weaker
With Germany’s Manufacturing and Services PMIs printing below expected levels, and the Eurozone’s own services/composite measures failing to impress, the Euro came under further pressure on Thursday.
The Pound, meanwhile, advanced on its peers as UK retail sales jumped in April.
The 1.2% gain was significantly stronger than the 0.2% advance anticipated.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4018
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7129
Newsflash – EUR/GBP Set to Close Local Session Softer
The Euro to Pound Sterling (EUR/GBP) exchange rate is likely to end the European session trading in a weaker position as the prospect of a Greek default seriously reduces demand for the common currency.
If tomorrow’s Manufacturing and Services PMI’s for the Eurozone show the declines expected further Euro losses could be on the cards.
EUR/GBP Exchange Rate Down -0.3% as Greek Default Looms
With some sources betting that Greece will default on its June 5th payment to the International Monetary Fund – an outcome which could potentially see the Hellenic nation expelled from the currency bloc – the Euro was trading in a broadly softer position on Wednesday.
While German Producer Price data showed a smaller-than-expected monthly gain, separate figures showed that Construction Output in the Eurozone as a whole increased 0.8% on the month in March following a positively revised decline of -1.6% in February.
The Bank of England’s (BoE) meeting minutes, which showed that all members of the MPC voted to leave interest rates unchanged, had little impact on the EUR/GBP pairing.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7161
The Euro to Pound Sterling (EUR/GBP) exchange rate held declines on Tuesday despite UK inflation turning negative; the pairing was left trending in the region of 0.7200 as Eurozone sentiment tumbled.
Euro to Pound Sterling (EUR/GBP) Exchange Rate News: Rumours of Greece Reaching a Bailout Deal Fail to Support Euro, UK CPI Prints at -0.1%, Eurozone Inflation Holds at 0.0%
Over the course of the European session a number of influential ecostats had an impact on EUR/GBP trading, but the pairing began the day in a weaker position even as Greece appeared to be moving closer to reaching an accord with its creditors.
After months of uncertainty and conflicting reports, the assurance of Greek Finance Minister Yanis Varoufakis that the nation is ‘one week’ away from coming to terms with its creditors did little to improve demand for the Euro.
Concerns regarding the sustainability of a potential agreement continue to hang over the common currency and the Euro to Pound Sterling (EUR/GBP) exchange rate failed to recoup losses even as the UK was shown to have entered deflation in April.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7149
The -0.1% non-core UK Consumer Price Index defied forecasts for a steady 0.0% reading but had been heralded by the Bank of England (BoE) so Sterling’s slide was stymied to a certain extent.
Chancellor of the Exchequer George Osborne also viewed the result positively.
He stated; ‘We should not mistake this for damaging deflation. Of course, we have to remain vigilant to deflationary risks and our system is well equipped to deal with them should they arise.’
Sky News also commented; ‘The inflation figures for April are significantly below the Bank of England’s target rate of 2% however the discrepancy between today’s rate and the target rate should not set alarm bells ringing as the UK has not seen the kind of widespread asset price deflation that caused such damage in the 1930s.’
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7232
Meanwhile, the Eurozone’s own inflation data confirmed that consumer prices stagnated year-on-year in April after rising by 0.2% on the month.
While the steady 0.0% annual inflation figure could be viewed as positive, the Euro came under pressure as the ZEW economic sentiment surveys for the Eurozone fell short.
The Eurozone’s gauge printed at 61.2 in May, down from 64.8 in April.
Meanwhile, the German index plummeted from 53.3 to 41.9 in the same period and the nation’s Current Situation measure fell from 70.2 to 65.7.
According to ZEW President Professor Clemens Fuest; ‘Financial market experts have adjusted their optimistic expectations downward in May due to unexpectedly poor growth figures in the first quarter of 2015 and turmoil on the stock and bond markets. However, only a small number of survey participants actually expect a deterioration of the economic situation.’
Reports that the European Central Bank might expand the size of its quantitative easing programme also put the Euro under pressure on Tuesday.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Greek Negotiations, BoE Minutes, Eurozone Construction Output Data in Focus
The Euro to Pound Sterling (EUR/GBP) exchange rate could experience additional fluctuations in the hours ahead, but investors with an interest in the pairing will also be looking to tomorrow and the release of more major data.
Reports to be aware of from the Eurozone include Germany’s Producer Price Index and the region’s Construction Output numbers.
Germany’s PPI is expected to advance by 0.2% on the month in April and improve from -1.7% to -1.4% on the year.
However, volatility in the EUR/GBP currency pair is more likely to be occasioned by the publication of minutes from the latest Bank of England (BoE) policy meeting.
The last batch of minutes showed that the nine-member Monetary Policy Committee (MPC) was close to being divided on the subject of interest rate increases.
If these minutes reveal that one or more policymakers voted in favour of higher borrowing costs, the Pound could rally and advance against peers like the Euro and US Dollar.
The GBP/EUR exchange rate has the potential to advance above 1.40 on hawkish minutes.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7201, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1187, the US Dollar to Euro (USD/EUR) exchange rate was trending in the region of 0.8938, and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3882