The Pound Sterling to Euro (GBP/EUR), Pound Sterling to Swiss Franc (GBP/CHF) and Pound Sterling to US Dollar (GBP/USD) exchange rates all fell in the first half of Friday’s European trading.
Earlier… The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to Swiss Franc (GBP/CHF) exchange rates were both trending higher in Thursday’s European trading after falling due to political uncertainty and a dip in UK wage growth on Wednesday; while the Pound Sterling to US Dollar (GBP/USD) exchange rate dropped.
The Pound Sterling exchange rate is likely to become increasingly sensitive in coming months as the May general election draws closer. Chancellor to the Exchequer George Osborne released the last pre-election budget on Wednesday—a major development with the election only two months away.
Politicians hit back after the announcement, increasing political debate and uncertainty further. Some economists have suggests Osborne’s plans have flaws and political banter is likely to escalate in coming months as politicians vie for votes.
Euro Exchange Rates EUR/GBP, EUR/USD, EUR/CHF Softer
Meanwhile, the Euro to Pound Sterling (EUR/GBP) exchange rate could feel the impact of negotiations between Greece and its creditors. Tensions between Greece and Germany have been heightening in recent weeks and Greece is demanding repatriations from the largest nation in the currency bloc from WWII.
The notion was batted down at first and seen as a desperate attempt by the struggling nation to gain some financial aid, but it appears that not everyone is in agreement with Angela Merkel’s government. Some top politicians are breaking away to suggest Greece does indeed have a case for financial compensation.
Social Democrat Gesine Schwan commented: ‘In my view the issue is absolutely clear, we should provide financial help for the victims and their relatives. It is a matter of recognising that we committed terrible crimes in Greece.’
In addition, deputy leader for the Social Democrats Ralf Stegner also commented: ‘I believe we should be leading the discussion about reparations.’
However, Stegner believes it should be addressed separately from the current Greek austerity talks.
Stegner continued: ‘We should not link the issue with the current debate about the Euro crisis.’
Furthermore, it’s not just politicians suggesting that the repatriations should be paid. Two German citizens went to Greece to pay a total of £630 to a Nafplio town hall, suggesting that they wanted to do their bit to compensate for the German government’s attitude.
The mayor of Nafplio Dimitris Kotsouros commented: ‘They came to my office yesterday morning, saying they wanted to make up for their governments attitude. They made their calculations and said each German owed €875 for what Greece had to pay during World War II.’
Meanwhile, the Swiss National Bank (SNB) kept the current interest rate at -0.75% after recently making a further cut into the negative. The SNB took markets by surprise in January when it removed the peg between the Euro and the Swiss Franc (EUR/CHF) exchange rate.
The news shocked the currency market and the Swiss Franc began to appreciate dramatically and the SNB cut rates as a result.
SNB President Thomas Jordan commented: ‘With the new exchange rate situation, conditions for the Swiss economy have become more difficult. A noticeable weakening in the economy may be expected, particularly in the first half of the year.’
The US Dollar rallied against a host of other majors such as the Pound Sterling (USD/GBP), Euro (USD/EUR) and Swiss Franc (USD/CHF) after the Federal Open Market Committee (FOMC) adjusted its language to suggest that interest rate hikes may occur in the near future.
Many investors are expecting a rate hike at the June FOMC interest rate announcement and therefore the US Dollar exchange rate has been increasingly popular.
Federal Reserve Chairwoman Janet Yellen stated: ‘Today’s modification of the forward guidance should not be read as indicating that the committee has decided on the timing of the initial increase in the target range for the federal funds rate. This change does not mean an increase will necessarily occur in June, although we cannot rule that out.’
Pound Sterling to Euro (GBP’/EUR) and Pound Sterling to Swiss Franc (GBP/CHF) Exchange Rate Forecast
The GBP/EUR and GBP/CHF exchange rates may fluctuate on Friday with the release of UK Public Finances and Public Sector Net Borrowing figures.
Eurozone Current Account and German Consumer Price stats will also emerge.
The Pound Sterling to Swiss Franc (GBP/CHF) exchange rate is reaching 1.4730. The Euro to Swiss Franc (EUR/CHF) exchange rate resides at 1.0576. The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4864.The Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.3929.