Newsflash – GBP/EUR hits Low of 1.3582 after Greek, German Developments
Over the course of this week concerns that Greece would default on its payment to the International Monetary Fund (IMF) have limited the gains the Euro might otherwise have recorded as a result of upbeat domestic data.
However, while the all-important agreement between Greece and its creditors has yet to be reached, the Hellenic nation has opted to defer its payment until the end of the month – avoiding a default and potential ‘Grexit’.
The Euro was buoyed by the news and further gains were accrued as German factory orders were shown to have increased by more-than-anticipated on both a monthly and annual basis.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3594
Newsflash – Greek Progress Stalls, GBP Gains after BoE Leaves Interest Rates On Hold
The Pound Sterling to Euro (GBP/EUR) exchange rate recovered from a low of 1.3542 as the European session progressed and the Bank of England (BoE) delivered its interest rate decision.
As forecast, the central bank left interest rates and borrowing costs unchanged.
A hawkish inflation report from the BoE tomorrow and/or a Greek default could potentially drive GBP/EUR all the way to 1.37.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3619
Newsflash – Greece Rejects Proposal, but Makes Progress with Creditors
Although Greece reportedly rejected the bailout proposal put forward by its creditors, the Euro remained supported as it was said that the two sides ‘converged’ on some issues at the latest meeting – meaning a workable accord may finally be within reach.
Greece is said to be submitting a counter offer today, and if its creditors bite it would ease the heavy cloud of uncertainty which has been hanging over the currency bloc for much of 2015.
Such an outcome would boost demand for the Euro and could drive the GBP/EUR pairing to multi-month lows.
The Bank of England (BoE) is also due to deliver its interest rate announcement later today.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of
Newsflash – ECB Holds Rates on Reduced Deflation Risk, Pound Sheds 1%
As the European session progressed, the Pound extended declines against the Euro to fall 1% on the day’s opening levels and hit a low of 1.3605.
The European Central Bank (ECB) responded to the reduced deflation risk in the Eurozone by leaving interest rates on hold at its latest policy meeting, as expected by economists.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3624
Eurozone Unemployment Rate Falls, Retail Sales Climb – EUR/GBP Stronger
The Euro’s uptrend against the Pound continued on Wednesday as the Eurozone’s retail sales and unemployment numbers were released.
Consumer spending in the currency bloc was shown to have risen by 0.7% on the month in April – beating forecasts for a 0.6% increase – while the annual figure rose from 1.6% to 2.2%.
Similarly, the level of joblessness in the Eurozone was predicted to ease from 11.3% to 11.2% in April but actually declined to 11.1%.
These figures add to the brightening picture of the currency bloc’s economic outlook.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7281
Newsflash – GBP/EUR and GBP/USD Exchange Rates Drop as UK Services Sector Growth Slows
The Pound declined against both the Euro and US Dollar on Wednesday as the pace of UK service sector output slowed by considerably more than expected.
Economists had forecast that Markit’s Services PMI would print at 59.2 in May, down from 59.5 in April, but it actually plummeted all the way to 56.5 – the lowest reading of 2015 so far.
In the view of Markit economist Chris Williamson; ‘The surveys point to GDP growing at a quarterly rate of just 0.4% in May, raising doubts about the ability of the economy to rebound convincingly from the weakness seen at the start of the year. The lacklustre growth picture will be a concern to policymakers and effectively kills off the chances of any imminent hiking of interest rates by the Bank of England.’
The day’s other UK reports (the British Retail Consortium’s Shop Price Index and Nationwide House Price numbers) also fell short.
With Eurozone retail sales and employment figures ahead – not to mention the European Central Bank’s (ECB) interest rate decision, further GBP/EUR movement is guaranteed.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3722
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5283
The Pound Sterling to Euro (GBP/EUR) exchange rate remained trading in the region of 1.37 as both Greece and the nation’s creditors contemplated reform proposals which could break the current deadlock; however, upbeat UK Services PMI could see the Pound recoup losses in the hours ahead.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast – UK Construction PMI and Mortgage Approvals Support Pound, but Euro Bolstered by Eurozone Inflation Print
On Tuesday the Pound Sterling to Euro (GBP/EUR) exchange rate declined despite the UK publishing encouraging ecostats as investors became increasingly confident that Greece will reach a bailout agreement with its creditors before its next debt repayment on Friday.
Encouraging inflation data for the Eurozone also lent the common currency support.
Yesterday the UK’s Construction PMI printed at 55.9, bettering the 55.0 forecast, and domestic Mortgage Approvals were shown to have risen to 68,100 in April.
However, signs that the Greek negotiations were being stepped up a notch, coupled with a report detailing an uptick in both core and non-core consumer prices in the currency bloc, prevented Sterling from posting any notable gains against the Euro.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a low of 1.3729
Euro to Pound Sterling (EUR/GBP) Exchange Rate News – Will the Euro Hold Gains? GBP/USD Pushes above 1.53 on Fed Rate Hike Concerns
Whether or not the Euro is able to hold its recent gains against the Pound largely depends on what progress is made in the Greek situation.
Since the opening of the European session the Euro has eased lower in spite of a positive revision to the Eurozone’s Services and Composite PMIs.
While both measures were down from the figures recorded in April, the Services index printed at 53.8 (vs. the flash forecast of 53.3) and the Composite index came in at 53.6, up from the initially estimated 53.4.
Markit economist Chris Williamson said of the result; ‘The Eurozone recovery lost some of the wind from its sails in May, with growth of output and new orders both slowing to three-month lows. The weak Euro is boosting manufacturing and households are benefitting from lower inflation, but the region’s high unemployment continues to limit spending on goods and services. Heightened uncertainty surrounding the Greek debt crisis is also acting as a brake on growth.’
Although the Pound failed to gain against the Euro yesterday, the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed 120 pips over the course of the local session.
Hints from a Fed official that the US economic slowdown could last longer than just the first quarter weighed on the ‘Greenback’, as did a surprisingly steep decline in US factory orders.
The Euro to Pound Sterling (EUR/GBP) exchange rate achieved a high of 0.7282
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: UK Services PMI, BoE Interest Rate Announcement/Inflation Report Ahead
As it stands European leaders are contemplating a ‘comprehensive’ bailout proposal submitted by the Greek government, while the Greek government looks at a counter document presented by its lenders.
Greek PM Alexis Tsipras is due to meet with European Commission President Jean-Claude Juncker today and it is hoped that the two sides will finally come to a workable accord – just in time to prevent Greece defaulting on its next payment to the International Monetary Fund (IMF).
As stated by industry expert George Pagoulatos; ‘The need for a deal is so big, after such a prolonged liquidity crunch, that the relief for the wider public will eventually trump the cost of compromise.’
If a deal is struck the Euro could rally across the board.
Of course, the UK’s Services PMI will also have a marked impact on GBP/EUR trading in today, and investors will also be looking to both the Bank of England’s (BoE) interest rate announcement and upcoming inflation report for guidance.
Hawkish inflation or interest rate commentary from the BoE may see the Pound close out the week on a high.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7254, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5344, the US Dollar to Pound Sterling (USD/GBP) exchange rate was trending in the region of 0.6516 and the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.3782