The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened above the 1.38 level on Friday and could breach 1.39 as concerns over Greece continue to soften the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trading in a range of 1.3775 to 1.38
Economic growth in the UK was revised higher by the London based Office for National Statistics as it said that GDP expanded at a stronger than previously estimated rate last year and in the first quarter of 2015.
The rise came after the ONS said that revisions to construction sector output now meant that UK GDP rose 3.1% in 2014, rather than the previous figure of 2.8%.
In the first quarter of 2015, GDP was shown to have increased 0.4% rather than the 0.3% previously shown.
The cause for the revision was the way in which price changes and seasonal adjustments are calculated.
Investors chose to focus on the GDP revision rather than the construction output report which showed that output fell by 0.8% on the previous month in April. Economists had been forecasting for an output rise of 0.1%, following the strong 1.4% rise seen in March.
International Monetary Fund (IMF) Withdraws From Greek Talks
Fears that Greece will default on its repayments to its creditors and leave the Eurozone increased after the International Monetary Fund (IMF) withdrew its team of negotiators from the talks. The lender blamed a lack of progress in the talks for its decision.
‘The announcement that IMF officials were walking away from the negotiations with Greece was as sudden as it was unexpected, as was the tone of the officials, who came across as extremely downbeat. In short the verdict was scathing, with officials citing that the gaps between the relative negotiating positions hadn’t been bridged at all. It would appear that each side thinks the other is bluffing with Greek officials banking that US pressure could well see the EU compromise, or that Angela Merkel won’t want to go down as the German leader who oversaw the beginnings of the break-up of the single currency,’ said the chief market analyst from CMC Markets UK.
Talks between Athens and its creditors are set to continue, but time is rapidly running for a deal to be reached.
Euro Exchange Rate Softened As Eurozone Data Disappoints
Also weighing upon the Euro was the release of disappointing Eurozone industrial production data. The data showed that production increase by just 0.1% in April on a month-on-month basis, missing economist expectations for a rise of 0.3%.
On an annual basis, production rose by just 0.8%, well below the 1.8% increase seen in the previous month and worse than the 1.1% rise forecast.
The Euro was also weaker against the US Dollar (USD).