The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 0.71% on Wednesday afternoon.
Although Bank of England (BoE) minutes showed policy makers were unanimous in the decision to hold interest rates, the Pound strengthened versus many of its major peers. This is likely to be the result of traders expecting all of the policymakers to hold off from rate revisions given the uncertainty inspired by the recent general election.
The Euro, meanwhile, softened versus most of its major competitors after Greece warned that they would default on June’s International Monetary Fund (IMF) payment if they cannot unlock bailout funds. Additional losses can be attributed to poor data out of Germany.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4016.
Pound Sterling (GBP) Exchange Rate Forecast to Advance versus the Australian Dollar on US Dollar Strength
Despite a lack of data to provoke changes, the Pound strengthened versus its South Pacific counterpart as the result of US Dollar gains.
Minutes from the BoE showed that all of the policy makers opted to hold the benchmark interest rate. The minutes did, however, show that two of the policymakers decisions were ‘finely balanced’ which has prompted speculation that they will vote for a hike during the next meeting.
‘While there was a range of views over the most likely future path for bank rate, all members agreed that it was more likely than not that bank rate would rise over the three-year forecast period,’ the BOE said in the minutes, published in London on Wednesday.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3912 today.
Euro (EUR) Exchange Rate Forecast to Soften versus the US Dollar on Geopolitics
With the situation in Greece seeming no closer to resolution, the shared currency declined versus the US Dollar on Wednesday morning.
After it transpired that creditors disagreed with Greece’s sales tax proposals, the prospect that the Hellenic nation will unlock bailout funds is wearing thinner with every passing day. Adding to the pressure was a warning from Greece which stated that Athens would default on the next IMF payment unless it receives the bailout funds soon. ‘More time and effort is needed to bridge the gaps on the remaining open issues. We consider that progress is being made, albeit at a slow pace,’ European Commission spokesman Margaritis Schinas told a daily news briefing.
‘Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5. If there is no deal by then that will address the current funding problem, they won’t get any money,’ stated Nikos Filis, the government’s parliamentary speaker.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains Ahead of June 5th IMF Loan Payment
Unless there are significant developments between Greece and the Eurogroup, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains amid speculation that Athens will default. With that being said, there is the potential for GBP/EUR volatility on Thursday with several economic data publications pertaining to both the UK and Europe due for release.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3991 today.