Newsflash: GBP/EUR Falls to 1.37 on Prospect of Greek Deal
After it was reported that the Greek government had presented its creditors with a new reform proposal, the Pound’s downtrend against the Euro continued and the pairing slid to a low of 1.3705.
As it stands the GBP/EUR exchange rate is down 0.8% on the day. If Greece does manage to reach an agreement with the European Central Bank (ECB) and International Monetary Fund (IMF) further losses could be on the horizon.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3796
Newsflash: UK Construction Sector Output Increases, but Pound Remains Trending Lower
Even though the UK’s Construction PMI exceeded estimates by jumping from 54.2 in April to 55.9 in May (a far stronger reading than the 55.0 forecast) the Pound Sterling to Euro (GBP/EUR) exchange rate held its 0.2% decline.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was able to consolidate gains after the report was published however, with ‘Cable’ climbing 0.3% on the day’s opening levels.
Markit economist Tim Moore stated; ‘May’s survey provides the first sign of a postelection bounce in the UK construction sector. With a sustained period of policy uncertainty no longer on the horizon, business confidence surged back to its highest level since early-2006.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3886
Although an emergency gathering of Eurogroup leaders failed to progress the Greek bailout negotiations, the Pound Sterling to Euro (GBP/EUR) exchange rate fell back to trading in the region of 1.38 on Tuesday following the UK’s disappointing manufacturing data.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – Pound Declines as Poor UK Manufacturing Print Undermines 2015 BoE Interest Rate Hike Expectations
On Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate softened following the publication of the UK’s Markit Manufacturing PMI.
The index failed to advance from 51.8 to 52.5 in May, as expected by economists, but instead printed at 52.0.
David Noble of the Chartered Institute of Procurement and Supply said of the result; ‘Overall, the sector’s enduring driver continued to be domestic demand, as exports failed to ignite any new highs in recovery. This uninspiring level of activity is likely to cast a shadow in the coming months and encourage expectations of a flatlining future.’
With the UK economic recovery so unbalanced, it is unlikely that the Bank of England (BoE) will start considering hiking interest rates for the foreseeable future.
Data from the Eurozone was slightly more encouraging. While final Manufacturing PMIs for both Germany and the Eurozone as a whole were slightly negatively revised from their flash estimates, the measures for Italy and France were stronger than anticipated.
German inflation data also showed the anticipated increase in consumer price gains.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a low of 1.3837
Euro to Pound Sterling (EUR/GBP) Exchange Rate News – German Unemployment Falls by Less than Forecast, Greek Talks Make Little Progress
Part of the reason for the uptick in the Euro to Pound Sterling (EUR/GBP) exchange rate was the news that heads of both the European Central Bank (ECB) and International Monetary Fund (IMF) participated in emergency talks in Berlin in the hope of reaching some sort of agreement with Greece before the nation’s repayment deadline on June 5th.
The high-profile figures in attendance indicated that talks are being stepped up a notch amid fears that Greece could default on its payment at the end of the week.
In the view of industry expert Nicholas Economides; ‘Even a mediocre agreement is much better than the alternative for Greece, which is bankruptcy. Bankruptcy within the Euro would be very difficult to manage and would require tremendous support from the ECB, which is unlikely.’
As the European session progressed, Germany’s employment data for May showed that the level of joblessness in the Eurozone’s largest economy fell by -6,000 last month – slightly less than the -10,000 decrease in unemployment expected by economists.
The German unemployment rate held at 6.4%.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7226
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Fluctuate on UK Construction PMI, Eurozone Inflation Data
In the hours ahead the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to experience additional volatility as the UK publishes its Markit Construction PMI and the Eurozone releases the region’s Consumer Price Index for May.
The UK’s Construction measure is believed to have risen from 54.2 to 55.0 in May, but if the report disappoints (as yesterday’s manufacturing data did) the Pound could be pressured lower against peers like the Euro.
Meanwhile, the Eurozone’s CPI is projected to show a 0.2% increase in year-on-year inflation, up from the stagnation recorded in April.
The core measure of inflation is expected to print at 0.7% – a slight improvement on April’s 0.6% figure.
If inflation does indeed accelerate it would prove that the European Central Bank’s (ECB) quantitative easing measures are having the desired affect and could bolster demand for the common currency.
That being said, any deterioration in the Greek situation would be Euro-negative.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7209, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5200, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6579 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3860