Agreement in Athens Prompts Euro (EUR) Rise on Increased Optimism, GBP/EUR Exchange Rate Falls as Sterling (GBP) Remains Stagnant
With confirmation of a Greek bailout deal this morning, although it remains for it to be ratified by the nation’s parliament and vetted by Eurozone finance ministers, the single currency (EUR) experienced a decided boost. As chances for another repayment default appear to be mostly banished now, the GBP/EUR exchange rate has lost ground once more and is currently trending down at 1.4135.
Positive News from Greece Set to Shore up Euro (EUR), GBP/EUR Exchange Rate Stands to be Driven Lower
Reports this morning suggest that a Greek bailout deal will be reached with creditors before the 20th August deadline, when a 3.4 billion Euro repayment is due to the European Central Bank (ECB). With the seeming retreat of another potential threat to the stability and economic future of the Eurozone the common currency (EUR) the value of the Euro will likely be buoyed in the coming hours, with the potential to push the GBP/EUR exchange rate to a further weekly low.
Presently the GBP/EUR pairing is in the region of 1.4116, with the EUR/GBP exchange rate is trending upward at 0.7084.
The Pound (GBP) seems unlikely to substantially recover from the Bank of England (BoE) Rate Decision disappointment in the coming week as the single currency (EUR) looks for a boost on Inflation Rates.
Frustrated Hopes for Coming Interest Rate Hike Drive Down the GBP/EUR Exchange Rate as the Pound Weakens
Thursday was anything but ‘super’ for the Pound (GBP) as the Bank of England (BoE) data proved to be more dovish than hawkish in the eyes of many. As the Monetary Policy Committee (MPC) voted 8-1 to maintain the current 0.5% level of interest rates the chances of a hike before year’s end took a significant dive. Pundits had been anticipating as many as two or three dissenters to vote in favour of a rate rise, leading to a general spurning of Sterling as investors moved elsewhere.
Industrial Production figures varied for the Eurozone on Friday, as the ‘big four’ nations were split in terms of growth. Germany and France saw month-on-month production decreases, with the German number at 1.4% falling its furthest in a year, while Italy and Spain both posted increases. The Spanish result in particular was a positive one, as the nation soared past the forecast 2.53% to hit 4.5%. All together this prevented the Euro taking too much of a hit, although the GBP/EUR exchange rate did soon begin trending upwards again.
Sterling (GBP) Looks to Rally on Upcoming Unemployment Data, Dovishness Inspired by Bank of England Disappointment May Prove Hard to Shake off
Domestic data is going to be a lot thinner on the ground for the UK in the coming week, although that is perhaps to be expected after the BoE bumper crop. A rally could potentially be in store, however, on Wednesday with the release of UK Unemployment Rate and Change reports. Positive showings, for one or both, would certainly go a long way to helping the Pound recoup some of its losses and to prompting a resurgence for the GBP/EUR exchange rate.
Construction Output on Friday may hold some further hope, although the weaker Construction PMI that was posted on Tuesday does suggest that this area could be seeing a further shortfall. Forecast to see a significant rise on the previous month, from a 1.3% increase to 4.11%, a lacklustre performance may easily cause damage to Sterling and the UK’s economic prospects
GDP Growth and Inflation Rates Hold Potential for Bullish Euro (EUR), GBP/EUR Exchange Rate Likely to Suffer
Much more is due out from the Eurozone in the coming week, however, which certainly seems guaranteed to cause some definite movement for the GBP/EUR pairing. The overall Industrial Production for the Eurozone is unlikely to cause much of a stir after this week’s figures, although a positive result on Germany’s ZEW Economic Sentiment Index could send the Euro forging ahead to consolidate its gains.
A swath of Inflation Rates will be released into Thursday and Friday, along with the GDP Growth Rates for many of the Eurozone’s members. If current trends continue Germany, France and Greece are likely to post figures below expectations, while Italy and Spain could remain positive. So long as the overall results for the Eurozone remain on or above forecast, however, the Euro should remain relatively strong and ensure that the GBP/EUR exchange rate remains stagnant.
Current GBP, EUR Exchange Rates
At time of writing the GBP/EUR exchange rate was trending narrowly in the region of 1.4200, with the EUR/GBP pairing equally sluggish at 0.7041.