The Euro to Pound Sterling (EUR/GBP) exchange rate edged higher by around 0.32% on Wednesday afternoon while the Euro to US Dollar (EUR/USD) exchange rate advanced by around 0.11%.
Despite the fact that the International Monetary Fund (IMF) has reportedly rejected the latest reform proposal submitted by Athens, the Euro climbed versus its peers on Wednesday. This is likely to be attributed to optimism that, despite the wide gaps to bridge, Greece will be able to strike a deal with creditors over the next few days.
The Pound Sterling, meanwhile, edged higher versus many of its major peers in response to hawkish comments from Bank of England (BoE) policymaker Martin Weale. The gains have been sluggish, however, after mortgage approvals failed to advance as much as economists’ had forecast.
The US Dollar is holding relatively steady despite registering reasonably positive domestic data. The modest fluctuations are the result of the hangover from a much bigger-than-expected declination in May’s Durable Goods Orders.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7123.
The Euro to US Dollar (EUR/USD) exchange rate is currently trending in the region of 1.1186.
Euro (EUR) Exchange Rate Edges Higher versus the British Pound and US Dollar on Greek Optimism
In the early stages of Wednesday’s European session the shared currency advanced versus its peers as Eurozone finance ministers prepared to meet in Brussels to discuss Greece for the third time in a week. With the latest set of proposals submitted by Athens described as a step forwards by several Eurogroup officials, optimism that the Hellenic nation could strike a deal within days saw heightened demand for the common currency.
However, later in the day it was reported that the IMF has rejected the latest proposal, offering a counter proposal which would compromise Syriza’s electoral red lines. Despite this set back, the Euro was little effected with many traders feeling that Greece has no choice but to accept the counter proposals lest they default on forthcoming loan repayments.
Pound Sterling (GBP) Forecast to Trend within Limited Range against the Euro and US Dollar after UK Mortgage Applications Grew Less-than-Expected
BoE policymaker, Martin Weale, made some hawkish comments in an interview with the Financial Times which caused the Pound to rally versus many of its rivals. Weale suggested that the recent pickup in the British labour market, with particular reference to wage acceleration, is likely to pressure the Monetary Policy Committee (MPC) into hiking the cash rate in 2015.
The gains initiated by Weale were pegged back, however, thanks to a disappointing result from the solitary British data publication. BBA Loans for House Purchase were forecast to rise from 42,020 to 43,350 in May, but the actual result only reached 42,530. Although mortgage applications missed estimates, May’s result was still a fresh 14-month high.
US Dollar (USD) Exchange Rate Forecast to Hold Steady against the Pound and the Euro despite Positive Growth Data
Although US data produced positive results on Wednesday, the ‘Greenback’ (USD) was minimally affected. This is due, in part, to improved market sentiment amid optimism regarding Greece’s future in the Eurozone. The US asset also failed to advance thanks to the hangover from Tuesday’s poor data which saw both Manufacturing and Durable Goods Orders fail to meet with the respective market consensuses.
Revised readings for first-quarter US Gross Domestic Product met with market estimates. In addition, first-quarter Personal Consumption bettered the median market forecast 1.9% growth, with the actual result reaching 2.1%.
Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) Exchange Rates Forecast to Hold Steady ahead of Greek Summit
With Eurozone officials due to meet later tonight to discuss Greece and attempt to hash out an 11th-hour deal, the Euro to Pound Sterling (EUR/GBP) and US Dollar (EUR/USD) exchange rates are likely to hold steady. Thursday ought to see volatility for both pairings with data due for all three nations. US labour market data will be of particular significance to gauge the pressure the Federal Open Market Committee (FOMC) will face when next reviewing monetary policy.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within the range of 0.7084 – 0.7123 during Wednesday’s European session.
The Euro to US Dollar (EUR/USD) exchange rate was trending within the region of 1.1157 – 1.1235.