The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened back above the 1.38 mark on Thursday afternoon as economists shifted their attention from disappointing UK trade balance data to the situation in Greece.
The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened to a session high of 1.3819
Earlier in the session, the Pound Sterling had been weaker against the Euro after data released by the London based Office for National Statistics (ONS) showed that the UK’s trade deficit widened to £10.34 billion in February, a rise from the £9.17 billion seen in January. The report also showed that in the three months leading to February 2015, the goods deficit between the UK and other EU countries reached a record high of £21.1 billion.
As the session, progressed economists grew concerned over Greece. Worries had eased slightly after Greece made a crucial repayment to the International Monetary Fund (IMF) and managed to win additional emergency lending for its banks. The country now has six days to improve upon its economic reform package to give Eurozone ministers enough time to debate as to whether Greece deserves more funds when they meet on April 24.
Athens submitted a 26-page list of planned reforms last week but Euro zone officials said that the measures lacked key details and proper assessments of the financial implications. The officials also said that trust was so low that ministers would want to see legislation going through the Greek parliament, not just promises, before they released more funds.
‘As a finance minister… in order to create the liquidity, this is necessary to see these negotiations through, hopefully to a sustainable solution. I have to make the same request that we are allowed to issue T-bills over and above a certain limit. This is in order to create the liquidity necessary to see us through the end of the month or the next month or June, so as to be able to redeem payments to the former troika…to the IMF in this case,’ said Greek Finance Minister Yanis Varoufakis.
Trust between Greece and Germany in particular is at a low as Athens persists with trying to claim war reparations. With the Greek Prime Minsiter visiting Russia, some in Berlin are concerned that the Greeks may put up a special pavilion on German war crimes at Moscow’s 70th anniversary of World War Two.
The Pound Sterling could make further gains against the Euro if Friday’s Industrial and Manufacturing Production data comes in positively.