Pound Gains on Euro after Greece Misses IMF Payment, GBP/USD Fluctuates before Manufacturing Data
The Pound was able to edge back above 1.41 on Wednesday as Greece, as expected, failed to pay the 1.6 billion Euros owed on time.
However, GBP/EUR losses were a little limited as Greek PM Alexis Tsipras asserted that even if the Greece votes against the reform proposals presented by creditors, a ‘Grexit’ isn’t a foregone conclusion.
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) currency pair slipped below 1.57 as the ‘Greenback’ was boosted by demand for safe-haven assets and investors looked ahead to today’s UK and US Manufacturing reports.
GBP/USD Advances before US Confidence Data, Is a Greek Deal Being Made?
Ahead of the publication of the US Consumer Confidence report the Pound Sterling to US Dollar (GBP/USD) exchange rate was able to advance to a high of 1.5776.
The GBP/EUR exchange rate, meanwhile, came away from the day’s high of 1.4115 amid rumours Greece is in talks to form a last minute agreement with creditors ahead of tonight’s scheduled IMF repayment.
If a deal is indeed struck at this 11th hour it would throw Sunday’s referendum in doubt and could trigger a Euro rally.
Newsflash: UK GDP Revised, GBP/EUR Exchange Rate Pushes Higher Today
The Pound Sterling to Euro (GBP/EUR) exchange rate consolidated and extended earlier gains, advancing over 0.4% on the day’s opening levels, as the UK’s final first quarter growth figures were positively revised.
The UK economy was shown to have expanded by 0.4% on the quarter (rather than the 0.3% originally projected) and to have grown by 2.9% – a far stronger rate of output than the 2.5% forecast.
Euro losses were limited as both the Eurozone’s Unemployment and Inflation figures met estimates.
With the day’s main ecostats out of the way the focus will return to Greece and speculating about whether the nation is likely to default on tonight’s IMF repayment.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4086 while the Pound Sterling to US Dollar (GBP/USD) exchange rate was holding steady at 1.5725
The Pound Sterling to Euro (GBP/EUR) exchange rate could return to trending around 1.43 later today if Greece defaults on its IMF repayment, but both the GBP/EUR and GBP/USD currency pairs softened in response to UK interest rate remarks.
Forecast for Greek Default and Grexit Drive Pound Sterling to Euro (GBP/EUR) to 2015 Best Rate, GBP/USD Gains on US Housing Data
The Pound Sterling to Euro (GBP/EUR) exchange rate surged on Monday in reaction to the proposed Greek austerity referendum, the nation’s emergency bank holiday and the introduction of capital controls.
The pairing leapt to a seven-year high of 1.43 early in the European session and derived additional support from below-forecast German inflation data.
European Commission President Jean-Claude Junker said of the common currency’s slide; ‘In one night, the Euro suffered a major blow and goodwill was thrown to the wind. It’s not a game of liar’s poker. There are not winners or losers. Either we are all winners or we are all losers.’
Meanwhile, the Pound Sterling to US Dollar (GBP/USD) exchange rate was able to register a half cent gain after the US Pending Home Sales report disappointed expectations. Pending home sales in the world’s largest economy were shown to have increased by 0.9% on the month in May, rather than the 1.4% expected, with the annual figure sliding from a negatively revised 12.6% to 8.3%.
Bank of England (BoE) Implies Interest Rates Could be Cut, GBP/EUR, GBP/USD Exchange Rates Dip Despite UK Confidence Rising
The Pound’s bullish run against peers like the Euro, US Dollar and Australian Dollar came to an abrupt end on Monday as investors responded to some surprising comments from the Bank of England’s (BoE) chief economist.
In recent weeks, positive UK data and hawkish remarks from BoE policymaker Martin Weale had led some industry experts to bet that the central bank might be persuaded to increase interest rates at the end of this year rather than waiting until the first quarter of next.
However, those hopes were dashed after economist Andy Haldane dismissed expectations for an early revision of borrowing costs and even went so far as to imply that a cut is as likely as a hike at the present juncture.
Haldane stated; ‘It is better to err on the side of over-stimulating, then course correcting if need be, than risk derailing the recovery by tightening and being unable then to course-correct. […] This suggests that a policy of early life-off could be self deflating. It would risk generating the very recession today that it was seeking to ensure against tomorrow. […] Trying too hard to unstick interest rates, or doing so too quickly, also runs the risk of making a difficult situation worse.’
Sterling managed to claw back some of its initial declines following the publication of the GfK Consumer Confidence index.
The gauge for June had been expected to rise from 1 to 2, but it actually leapt to 7.
Euro (EUR) Exchange Rate Fluctuates against British Pound (GBP) and US Dollar (USD) as German Retail Sales and Unemployment Data Defy Predictions
Although the situation in Greece is likely to be the main driver of both Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rate movement ahead of tonight’s potential default and Sunday’s decisive referendum, ecostats from the Eurozone’s largest economy also had a modest impact on Euro demand on Tuesday.
Early in the European session, German retail sales were shown to have increased by 0.5% on the month in May, beating the stagnation predicted. However, as April’s month-on-month gain was negatively revised, the annual figure printed at -0.4% instead of the 2.8% expected.
Germany’s employment data was also wide of the mark, with the level of joblessness in the Eurozone’s largest economy easing by just 1,000 in June. A 5,000 decline in unemployment had been forecast.
UK GDP, Eurozone Inflation, US Consumer Confidence and Grexit News Forecast to Drive Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Movement Today
Monday witnessed some fairly extensive currency market movement and given the ecostats scheduled for publication and the pressure mounting on Greece, more of the same can be expected today.
As previously stated, any news relating to Greece’s IMF repayment and Sunday’s referendum will be the primary cause of Euro volatility today – but the Eurozone’s upcoming inflation report is also worth watching. If the pace of consumer price inflation eases, as is expected to be the case, it would act as yet another Euro headwind.
Meanwhile, both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates may fluctuate in reaction to the UK’s final first quarter growth figure. Economists are expecting growth to be positively revised on both a monthly and annual basis.
The main cause of US Dollar movement today is likely to be the nation’s Consumer Confidence index. If sentiment rises as projected, the USD/GBP and USD/EUR currency pairs could climb.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4068, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5716 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7108.