The Euro to Pound Sterling (EUR/GBP) exchange rate declined by around -0.35% on Tuesday morning.
Late on Monday evening the Pound dived versus its peers after the Bank of England’s (BoE) Chief Economist, Andrew Haldane, warned against an early interest rate hike. Sterling managed to recover some of its losses on Tuesday morning, however, after Consumer Confidence bettered estimates in June.
The Euro, meanwhile, continues to trend bearishly amid tensions in Greece ahead of the austerity referendum. With a large International Monetary Fund (IMF) repayment due, and little-to-no chance of that payment being met, Greece is likely to become the first European country to default on an IMF payment.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7108.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a tight range on Monday afternoon.
After Greek Prime Minister Alexis Tsipras announced a referendum on the austerity measures proposed by creditors, the shared currency tumbled versus its rivals. With the bailout period due to expire and a consolidated International Monetary Fund (IMF) payment due within 24 hours, the timing of the referendum has caused uncertainty and anxiety, with the potential for a Greek exit from the Eurozone amplified with every passing day.
The Pound, meanwhile, softened versus most of its peers on Monday thanks to profit-taking. After recent positive ecostats caused the Pound to advance considerably, a number of attractive selling positions opened and traders reacted accordingly which caused the Pound to decline. Mixed results from British data on Monday had minimal impact.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7087.
Euro (EUR) Exchange Rate Forecast to Edge Lower against the British Asset on Greek Capital Controls
The situation in Greece has reached a crucial point as citizens prepare to vote on whether or not to accept the austerity measures creditors say are a must before any bailout funds are unlocked. Should they vote against austerity, a Eurozone exit is inevitable. The announcement of the referendum caused the European Central Bank (ECB) to limit the life-support for Greek banks, which have now been closed so as to avoid complete insolvency. Capital controls have been imposed also as a measure against complete financial collapse.
European data has produced disappointing results on Monday morning, but the data had minimal impact as traders await the more significant German inflation report. Eurozone Consumer Confidence failed to meet with expectations in June.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.6992 today.
Pound Sterling (GBP) Exchange Rate Forecast to Tick Higher against the Common Currency despite Profit-Taking
As explained above, the Pound declined versus most of its peers in response to trader profit-taking following a healthy Sterling surge. Speculation that the Bank of England (BoE) will be one of the first major central banks to hike its cash rate initiated heightened demand for the British asset.
Monday has seen the Pound holding losses versus most of its peers after mixed domestic data results had minimal impact. May’s Mortgage Approvals came in at 64,400; missing the median market forecast 68,800 approvals. May’s Net Lending Securities on Dwellings bettered the market consensus of 2.0 billion, with the actual result reaching 2.1 billion. Net Consumer Credit came in at 1.0 billion in May, just below the forecast 1.1 billion.
‘While the Bank of England reported that mortgage approvals for house purchases dipped in May, it does not fundamentally undermine our belief that housing market activity is on the up,’ said Howard Archer, chief European and UK economist at IHS Global Insight.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses ahead of German Inflation Data
With the German Consumer Price Index due for publication later on Monday, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold losses ahead of the results. Despite the fact that the data holds a high weighting in terms of economic influence, the result may be less impactful on Euro movement with the situation in Greece dominating trader focus. The same may be true of Tuesday’s European data, including German labour market figures. British first-quarter Gross Domestic Product ought to have an impact on EUR/GBP volatility.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced to a high of 0.7082 today.
