Investors Reacting with Apprehension as Eurozone Finance Ministers Meet to Discuss Greek Bailout, GBP/EUR Exchange Rate Boosted
With Eurozone finance ministers meeting this afternoon to decide whether or not to sign off on the third bailout of Greece as it currently stands confidence in the Euro (EUR) has apparently faltered. Although all present were reportedly expecting a positive result to talks there were enough conditionals to send the GBP/EUR pairing into a climb, currently at 1.4059.
Worse than Anticipated GDP Data for the Eurozone Outweighed by Greek Parliament Approval for Bailout to Shore up the Euro (EUR)
Although the French and German GDP figures this morning were ultimately a disappointment the common currency (EUR) avoided particular damage as Greece’s bailout deal was approved by parliament. The first step towards the Hellenic nation securing funds to make its 20th August European Central Bank (ECB) repayment, this naturally provided a boost of confidence which is keeping the GBP/EUR exchange rate trending narrowly this morning at 1.4018.
Increased uncertainty over the passage of the third Greek bailout has begun to hurt the single currency (EUR) today, prompting the GBP/EUR exchange rate to climb in spite of a lack of UK data.
Disenchanting UK Employment Statistics Keep the Pound (GBP) Bearish as the Euro (EUR) Soars on Bailout Agreement for Greece
Yesterday saw the hopes for a Pound (GBP) rally dashed as the UK employment data proved to be insufficiently encouraging to reduce the continued influence upon traders of last week’s Bank of England (BoE) interest rate disappointment. The Unemployment Rate remained static as anticipated, however, the Employment Change figure reflected a worse than forecast decline of -63,000 instead of -55,000. A certain amount of optimism remained, as analysts continued to exhibit confidence in predictions of a BoE hike in the first quarter of the next year, although the GBP/EUR exchange rate did not reflect this.
‘White smoke’ rose from Athens on Tuesday as Greek finance minister Euclid Tsakalotos announced that an agreement had been reached on a third bailout proposal between his government and its creditors. A marked increase in optimism for the prospects of the common currency (EUR) saw the GBP/EUR pairing quickly slump to 1.4056.
Vocal German Resistance to Greek Deal Turns the Euro (EUR) Dovish, GBP/EUR Exchange Rate Rising in Spite of Sluggish Sterling (GBP)
Voting on the bailout package is expected to start today as the Greek parliament meets in an emergency session. In spite of an unenthusiastic reception to the finer details from a number of members of Prime Minister Alexis Tsipras own party it is expected that opposition parties will provide the votes necessary for ratification. That is, however, only the first hurdle that the deal must clear this week if it is to pass before the 20th August European Central Bank (ECB) deadline arrives.
Decided scepticism and reticence from Finnish and, more crucially, German ministers have put the urgent timescale into question. Friday’s vote by Eurozone finance ministers is vital to the passage of the bailout package, along with timely ratification by a number of other European parliaments, including the Bundestag. Any serious objection to the deal as it stands has the potential to derail the entire undertaking, even though Germany has repeatedly stated that bridge financing remains an option. Growing caution from traders saw the GBP/EUR pairing begin to make some traction today, trending up to a daily peak of 1.4062.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: Single Currency Will Feel the Effect of any Possible Bailout Package Snags
GDP data for a number of Eurozone nations will release tomorrow, although it will likely remain in the shadow of any progress or holdups on the Greek bailout. A clear demonstration of economic strength for the bloc would, however, be of benefit to the single currency in spite, or perhaps because, of the increased worries surrounding progress for Greece.
Rounding off a rather slow data week the UK has only the year-on-year Construction Output for June due out before the weekend. Although a significant increase is forecast it seems unlikely that it will be enough to boost the Pound out of its current bearishness.
Current GBP, EUR Exchange Rates
Presently the Pound Sterling to Euro (GBP/EUR) exchange rate is continuing to move up around 1.4052, while the Euro to Pound Sterling (EUR/GBP) pairing is in a downtrend at 0.7113.