UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a narrow range on Friday morning, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate advanced by around 0.52%.
After having declined significantly in the early half of the week, the Pound strengthened versus its major peers amid fears of unjustified depreciation. Increasing speculation that the Federal Reserve will delay a rate hike into 2016 has narrowed potential divergence between British and North American policy outlook.
The common currency, meanwhile, strengthened versus its major rivals after Greece submitted a reform proposal which, at first sight, seems to have gained the approval of many Eurozone officials. The Euro appreciation has tailed off during Friday’s European session, however, as Greek Prime Minister Alexis Tsipras faces convincing his government and people to agree to austerity measures they just recently rejected in the referendum.
The US Dollar softened versus its competitors after fears surrounding the situation in Greece and with China’s stock market eased. Risk sentiment has improved and traders are investing in high-yielding assets rather than the safe-haven US Dollar.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3898.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5450.
Yesterday…
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Strengthen as Greece Prepares Reforms Proposal
The Pound Sterling to Euro (GBP/EUR) exchange rate gained by around 0.46% on Thursday morning.
The Bank of England (BoE) held the cash rate at the current record-low 0.5% as predicted by most analysts. It is difficult to predict the fallout from a Greek exit and the effect that would have on the UK, so hawkish policy is a risky move at this juncture. Also weighing on policymaker decisions is the overvalued Pound. An early rate hike could risk irreversible damage to exports if the Pound’s value rises exponentially.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3939.
The shared currency, meanwhile, edged lower versus many of its major peers as traders await news regarding Greece’s reform proposal. This will be the first time Athens has presented a fresh reform proposal since the ‘no’ victory in the recent austerity referendum. Many analysts predict that it will be similar to previous submissions, although Athens is likely to ask for greater debt relief given the International Monetary Fund (IMF) already admitted that this was a necessity for Greece to recover.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the range of 1.3854 to 1.3947.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Edge Higher after Vague Fed Minutes
The Pound Sterling to US Dollar (GBP/USD) exchange rate ticked higher by around 0.12% on Thursday morning.
British economic data printed positively on Thursday which aided the Pound’s appreciation. The RICS House Price Balance was forecast to advance from 34% to 36%, but the actual result reached 40% in June. The steep rise in house prices has been connected to higher demand from cheap mortgages and rising wages in London. ‘There had been some hope that the removal of political uncertainty following the general election would encourage more properties onto the market but the initial indications are that this is not happening,’ said RICS chief economist Simon Rubinsohn.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5384.
After the Federal Reserve published minutes from the most recent policy meeting, the US Dollar softened versus many of its peers. The minutes were generally vague and showed policymakers were keen to avoid hiking rates until the situation in Greece has improved. The US asset avoided a larger declination, however, thanks to demand for safe-haven assets amid fears surrounding China’s stock market and the ever present potential for a Greek exit from the Eurozone.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5354 to 1.5420.
