The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.24% on Thursday morning.
After having gained significantly on Wednesday thanks to positive minutes from the Bank of England’s (BoE) most recent policy meeting, the Pound levelled off on Thursday ahead of domestic data due later in the morning.
The single currency, meanwhile, gained versus many of its major peers despite disappointing German economic data results. The appreciation can be linked to traders fearing that Wednesday’s depreciation was overdone.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3987.
The Pound Sterling to Euro (GBP/EUR) exchange rate rallied by around 0.76% on Wednesday afternoon.
After minutes from the Bank of England’s (BoE) most recent policy meeting showed policymakers were upbeat about Eurozone growth and its positive impact on the British economy, speculation mounted that the next move from the institution will be a benchmark rate increase. This saw heightened demand for the Pound even as the general election is causing political uncertainty.
The single currency, meanwhile, softened versus the majority of its most traded currency competitors after a Eurogroup official stated that Greece will not be presenting reforms, as promised, in Riga on Friday. The slide was further lubricated by a much lower-than-forecast Eurozone Consumer Confidence print.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4006.
Pound Sterling (GBP) Exchange Rate Strengthens on BoE Minutes
Although the forthcoming general election has had a marked effect on investor confidence, the Pound strengthened on Wednesday. This was due to positive minutes from the BoE’s most recent policy meeting. The upbeat print has fuelled speculation that the Monetary Policy Committee (MPC) will look to hike rates after the general election has concluded.
‘The BoE slipped in a comment that seems to indicate markets are being too relaxed about the timing of upcoming rate hikes,’ said Enrique Diaz-Alvarez, chief risk officer at Ebury.
Sam Hill, senior UK economist at RBC Capital markets, said the minutes added ‘a hawkish tinge’ to exchange rate analysis, stating; ‘Looking ahead, there is the possibility of less downward pressure to come than previously thought from the strength of Sterling. Combine that with the reversal in the base effects from the fall in energy prices later this year and it is possible to imagine that the bank could envisage a faster pickup in inflation.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low today of 1.3873.
Euro (EUR) Exchange Rate Dives as Grexit Potential Mounts
After a Eurogroup official confirmed that Greece will not be presenting a reform package in Riga on Friday, the common currency softened versus the majority of its most traded currency rivals. Fears that Athens will use the money gained by taking spare cash from local governments to delay reforms is weighing heavily on investor confidence.
‘We need to know exactly what out of the whole programme are the 70 percent which Greece has said was acceptable, or which are the 30 percent that are not, and once we have a firm picture of that, we can start discussing that,’ the official said.
Aiding the common currency depreciation was a poor result from Eurozone economic data. Consumer Confidence was forecast to climb from -3.7 to -2.5, but the actual result dropped to -4.6.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains
Although the forthcoming general election is applying downward pressure on the British asset, the situation in Greece is likely to overshadow political uncertainty. Therefore, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.
Thursday is likely to see heightened GBP/EUR volatility with several reports pertaining to both the UK and Europe due for publication.
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a high of 1.4035 today.