Newsflash: Greece Avoids Default, Euro Gains
Prior to the publication of the Bank of England’s inflation report, the Pound softened against both the Euro and US Dollar.
Sterling shed around 0.8% against the Euro on the news that Greece has deferred making its payment to the International Monetary Fund (IMF) until the end of the month.
The fact that the nation didn’t default, and put its place in the Eurozone in jeopardy, was viewed as Euro-supportive.
However, if the Bank of England’s (BoE) inflation report is as hawkish as some industry experts are hoping, the Pound could rally in the hours ahead.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3601
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5319
On Friday the Pound Sterling to Euro (GBP/EUR) exchange rate could achieve 1.37 while the Pound Sterling to US Dollar (GBP/USD) currency pair may rally to 1.55 if the Bank of England (BoE) publishes a hawkish inflation report.
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: Pound Gains after Bank of England (BoE) Leaves Interest Rates on Hold
The Pound fluctuated against both the Euro and US Dollar on Thursday before approaching the close of the European session in a slightly stronger position against its main peers.
Sterling was little affected by the Bank of England’s (BoE) interest rate decision as the central bank left interest rates unaltered and the level of asset purchases unchanged, as economists had anticipated.
Whether or not the two more hawkish members of the Monetary Policy Committee (MPC) voted in favour of immediate adjustments remains to be seen, but given the recent run of disappointing UK ecostats, it doesn’t seem likely.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast – Euro Volatile as Greek Bailout Negotiations Come to a Head, Default Expected?
Later tonight the Greek government is expected to order the transfer of €300 million to the International Monetary Fund – despite not yet securing the emergency bailout funds needed to make this payment.
If the Hellenic nation manages to avoid a default it will lend the Euro support, but investors will also be hoping that Greece reaches an agreement with its creditors and brings six months of uncertainty to an end.
On Thursday Greek Finance Minister Yanis Varoufakis called on German Chancellor Angela Merkel to present a ‘Speech of Hope’ to the Greek people.
He asserted; ‘On September 6, 1946 US Secretary of State James F. Byrnes travelled to Stuttgart to deliver his historic “Speech of Hope.” Byrnes’ address marked America’s post-war change of heart vis-à-vis Germany and gave a fallen nation a chance to imagine recovery, growth, and a return to normalcy. Seven decades later, it is my country, Greece, that needs such a chance….. What should such a declaration include? Just as Byrnes’ address was short on detail but long on symbolism, a “Speech of Hope” for Greece does not have to be technical. It should simply mark a sea change, a break with the past five years of adding new loans on top of already unsustainable debt, conditional on further doses of punitive austerity.’
The reform proposals compiled by both Greece and the nation’s creditors were also leaked on Thursday afternoon, leading to debate over which side was asking for the greatest degree of compromise.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7332
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast –IMF Urges Federal Reserve to Delay Increasing Interest Rates Until 2016
Although the US Initial Jobless and Continuing Claims data showed a better-than-expected decline in the number of people applying for first time and continuing unemployment benefits, the Pound Sterling to US Dollar (GBP/USD) exchange rate remained 0.2% up on the day.
Sterling’s modest advance on the ‘Greenback’ was aided by comments from International Monetary Fund (IMF) Director Christine Lagarde.
During a press briefing Lagarde asserted that the Federal Reserve should put off adjusting borrowing costs until the first half of next year. The IMF also cut the US growth forecast for the second time in 2015.
Lagarde stated; ‘We still believe that the underpinnings for continued expansion are in place. The inflation rate is not progressing at a rate that would warrant, without risk, a rate hike in the next few months.’
The Pound Sterling to US Dollar (GBP/USD) exchange rate hit a high of 1.5366
Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast: BoE 2015 Inflation Projection Could Boost Sterling, Eurozone GDP, US Employment Report also Key Tomorrow
It might be nearing the end of the week, but the currency market is likely to be as lively as ever.
Early in the European session the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates could return to trending at higher levels if the Bank of England (BoE) delivers a rate hike-supporting inflation report.
However, GBP/EUR gains could be tempered if the Eurozone’s first quarter GDP is positively revised or Greece reaches an agreement with its creditors.
The Pound Sterling to US Dollar (GBP/USD) exchange rate could also tumble during the North American session if the US Non Farm Payrolls report shows a stronger-than-anticipated jobs gain in May.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7331, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5366, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6508, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3634