The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.26% on Friday morning.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen against the Single Currency (EUR) after Hawkish Carney
The British asset advanced versus many of its major peers on Friday morning amid positive sentiment towards the Bank of England (BoE) after Governor Mark Carney made hawkish comments on Thursday. Carney indicated that a benchmark rate hike is likely to come at the turn of the year, with borrowing costs rising steadily over the course of three years to around half historical averages.
‘It would not seem unreasonable to me to expect that once normalisation begins, interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historic averages. In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year,’ he said.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4378.
Euro (EUR) Exchange Rate Forecast to Soften against the British Pound (GBP) as German MPs Debate Greek Bailout Terms
German MPs are currently gathered to vote on whether to accept the terms of the third bailout deal for Greece. Most analysts believe that Germany will accept the deal, but at a heavy political cost. The division, not only within Europe but within Eurozone governments as well, has the potential to drive huge political shifts and cabinet reshuffles.
There is still the not so small matter of debt relief to hash out, however. Whilst most economists agree that Greece cannot sustain a recovery with the burden of its current debt load, cutting the debt would contradict Eurozone laws. The term ‘between a rock and a hard place’ has never been so relevant for both Greece and Germany.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4370 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains on Political Uncertainty
Given the lack of domestic data to curb the trend, the Pound is likely to continue trending higher versus many of its currency rivals. The shared currency will see fluctuations depending on the German vote. However, with mounting political uncertainty surrounding both Germany and Greece, the single currency is likely to hold a weak position. Therefore, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to trend higher over the course of Friday’s European session.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4398 today.