The Pound Sterling to Euro (GBP/EUR) exchange rate managed to regain some of its earlier losses as UK manufacturing and industrial production data came in better than economist forecasts. The Euro meanwhile found support as Greece managed to successfully repaid €750 million to the International Monetary Fund (IMF).
The Pound Sterling to Euro (GBP/EUR) Exchange Rate Touch a Session Low Of 1.3833
Early in the session, the Euro advanced by more than 1% against the Pound and made solid gains against the US Dollar (USD) as news broke that Greece had managed to repay €750 million to the IMF. The repayment eased fears that the nation would default. Despite the successful repayment investors, remain worried over the Greek situation as Monday’s Eurogroup meeting ended with nothing solid being achieved.
‘We will continue to monitor the situation and we stand ready to meet as soon as the institutions confirm that there is a basis for a successful conclusion,’ said Eurogroup Chairman Jeroen Dijsselbloem after the Brussels meeting ended.
As the session progressed, the Pound managed to claw back some of its earlier losses after data released by the London based Office for National Statistics (ONS) showed that UK industrial production grew at its fastest pace in six months in March. The unexpected increase came from a rise in oil and gas extraction. The data eased fears that the UK economy is slowing.
On a month-on-month basis, industrial production increased by 0.5%, better than the 0.1% seen in the preceding month and better than the 0.0% figure expected by economists. On a year-on-year basis, production increased 0.7%, smashing expectations for a rise of 0.2%.
Manufacturing production also improved more than forecast. Month-on-month manufacturing production increased 0.4% and on a year-on-year basis improved 1.1%.
EU Referendum to be held in 2016?
Further gains for the Pound are likely to be restrained due to speculation that Prime Minister David Cameron is drawing up plans to bring forward an in/out referendum on the UK’s membership of the European Union. Rumours abound that the vote will now be held in 2016 instead of 2017 as suggested in the Conservative Party’s manifesto pledge.
‘The mood now is definitely to accelerate the process and give us the option of holding the referendum in 2016. We had always said that 2017 was a deadline rather than a fixed data,’ said a source close to the Prime Minister.
The debate over whether the UK should stay or leave the EU is set to be hard fought as UKIP leader Nigel Farage had his resignation rejected by his party and will now be the most vocal supporter for a UK exit.