Greece Delivers Reforms, Reduced Grexit Fears Weaken GBP/EUR Exchange Rate Today
On Friday the Pound broadly strengthened, advancing on peers like the US Dollar (GBP/USD) and Australian Dollar (GBP/AUD) in response to the publication of positive UK trade data.
However, the GBP/EUR currency pair actually recorded declines as Greece met its midnight deadline to deliver reform proposals to creditors.
If these proposals are accepted, and aid unlocked, the GBP/EUR exchange rate may drop to new lows.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3869
The Pound Sterling to Euro (GBP/EUR) exchange rate plummeted by over 1% to hit a multi-week low of 1.38 on Wednesday, but the pairing could be on course to rebound to 1.40 today.
Pound Sterling to Euro Exchange Rate News: Greek Optimism, Safe Haven Demand See GBP/EUR, GBP/USD Drop before UK 2015 Budget
The Pound fell fairly dramatically against both the Euro (GBP/EUR) and US Dollar (GBP/USD) during Wednesday’s European session even as the UK’s Halifax House Price report printed positively and the first Conservative budget for twenty years was well received, in some quarters at least.
The GBP/EUR exchange rate slid all the way to 1.38 in reaction to the news that Greece applied for a third bailout and agreed to come up with workable reform proposals by today.
Greece also announced the continuation of capital controls and the extension of the national bank holiday while negotiations remain ongoing.
The hope that the nation being so close to financial collapse will result in either (or both) sides conceding on key issues in order to release funding kept the Euro trending higher against a number of its peers throughout local trading.
Meanwhile, the Chinese stock market situation, Greek unknowns and plunging commodity prices heightened demand for the US Dollar and pushed ‘Cable’ all the way to 1.53 prior to the release of the Federal Open Market Committee (FOMC) meeting minutes.
Euro Exchange Rate Pares Gains against Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) as Greece Prepares Reform Proposals, Experts Forecast Grexit
While the Euro spent much of Wednesday trending in a stronger position against both the Pound (EUR/GBP) and US Dollar (EUR/USD), the common currency lost over 0.3% against the ‘Greenback’ and 0.5% against Sterling on Thursday as Greece was left with only hours in which to come up with a viable reform proposal.
An economist with the Bank of America Merrill Lynch observed; ‘Should the Greek proposals be found wanting, the Europeans will go for Grexit quickly, instead of letting the country slowly slide into ‘Grexit by stealth’.
Other industry experts have also indicated that a Greek exit from the Eurozone is a possible scenario.
European Central Bank (ECB) Governing Council Member Ardo Hansson stated; ‘A few months ago I wouldn’t have believed that Greece would leave the Euro area. Now several months have passed without moving toward a solution. By now Greece’s situation is much worse than it was even 10 days ago. The situation isn’t hopeless but it is quickly and sharply deteriorating.’
US Dollar Pares Gains against Pound Sterling (USD/GBP) and Euro (USD/EUR) after FOMC Meeting Minutes Show 2015 Interest Rate Hike May not Occur with Greece in Focus
The Pound Sterling to US Dollar (GBP/USD) exchange rate was able to claw back some of its earlier losses as the minutes from the recent FOMC gathering showed that policymakers aren’t inclined to increase borrowing costs with the situation in Greece weighing on the global economic outlook.
The minutes stated; ‘Many participants expressed concern that a failure of Greece and its official creditors to resolve their differences could result in disruptions in financial markets in the Euro area, with possible spillover effects on the United States.’
If Greece does fail to secure funding by Sunday, not only will a US rate adjustment in September be out of the question, any changes being made in 2015 as a whole will be increasingly unlikely.
The US Initial Jobless data also showed that the number of people applying for first time jobless benefits was higher than predicted last week.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: German Trade Data, Bank of England (BoE) Interest Rate Announcement Unlikely to Influence Trading Ahead of Sunday’s Grexit Deadline
This morning’s trade numbers for Germany had little impact on the Pound Sterling to Euro (GBP/EUR) exchange rate. The data revealed that German exports jumped by 1.7% on a month-on-month basis in May, rather than declining -0.8% as forecast, while imports rose 0.4% and beat the 0.1% estimation.
The Bank of England’s (BoE) latest interest rate announcement is also unlikely to be the cause of much GBP/EUR exchange rate volatility given the fact that the central bank is likely to maintain borrowing costs until the political upheaval in Europe eases and the UK’s economic recovery becomes more balanced.
Current GBP, EUR, USD Exchange Rates
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7167, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1031, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5388 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3943