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British Pound to Euro (GBP/EUR) Exchange Rate Forecast to Trend above 1.39 after UK Retail Sales Better Estimates, European Commission Decision Ahead

The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.11% on Thursday afternoon.

After British retail sales data bettered estimates, the Pound strengthened versus most of its major peers. The appreciation has been somewhat sluggish, however, after a recent surge opened up some attractive selling positions and traders locked-in profits.

The Euro, meanwhile, is generally trading statically as the market awaits the European Commission’s decision as to whether to give Greece bailout funds. A slight appreciation can be linked to speculation that Greek officials will succumb to creditor demands lest they find themselves no longer part of the 19-nation currency bloc.

The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3958.

Pound Sterling (GBP) Exchange Rate Forecast to Hold Gains against the Single Currency after Accelerated Wage Growth Prompts BoE Rate Hike Speculation

The Pound is holding a position of strength against its major peers on Thursday after labour market data produced positive results on Wednesday. In particular, accelerated wage growth caused many futures traders to speculate that the Bank of England (BoE) will hike the cash rate in 2015. It is becoming increasingly likely that the British central bank will initiate a liftoff around a similar time to the Federal Reserve.

Thursday’s British economic data printed reasonably positively. On the year, May’s Retail Sales increased by 4.6%; bettering the median market forecast 4.3% sales growth. May’s Retail Sales including Auto Fuel rose by 4.6% on the year, in line with economists’ predictions. ‘The small increase in the official measure of UK retail sales in May should not be taken as a sign that the recovery in consumer spending is flagging,’ said Samuel Tombs, senior UK economist at Capital Economics. ‘Given the outlook for further falls in unemployment, stronger wage growth and looser credit constraints, 2015 still looks set to be a good year for retailers.’

Although the retail sales data was reasonably positive, it had minimal impact on Sterling movement. This is likely to be the results of traders locking-in profits after Wednesday’s surge, which saw the Pound reach fresh highs against most of its peers.

The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3919 today.

Euro (EUR) Exchange Rate Forecast to trend Statically against the British Pound ahead of Greek Bailout Decision

Euro-area finance ministers meet in Luxembourg later on Thursday to determine whether the proposed reforms submitted by Greek officials will be enough to grant the Hellenic nation vital bailout funds. This meeting has widely been viewed as Greece’s last chance to secure aid before the credit line runs dry. Should they fail, Athens will be very likely to default on the consolidated payment due to the International Monetary Fund (IMF) at the end of the month.

‘Failure to reach an agreement would… mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the Euro area and, most likely, from the European Union,’ the Bank of Greece said in a report. ‘Striking an agreement with our partners is a historical imperative that we cannot afford to ignore.’

Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Trend within a Limited Range ahead of Key Eurogroup Decision

So much rests on the Eurogroup’s decision later today that the Pound Sterling to Euro (GBP/EUR) exchange rate is unlikely to see any significant volatility ahead of the meeting. Should the meeting fail to resolve the situation, however, the single currency will dive across the board. With that being said, we could see the Pound soften if traders decide that the attractive selling opportunities presented by the recent Sterling surge are too tempting to ignore.

The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3974 today.