UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.6957.
With an absence of domestic data to drive changes, the shared currency is holding relatively steady versus its major peers. Now that tensions regarding the Greek situation have eased somewhat, market focus will shift to quantitative easing in the Eurozone and domestic data publications will be more impactful.
The Pound, meanwhile, is also trending statically versus its currency rivals. Traders await British finances data which should give a good indication of how the economy has changed in the early stages of a conservative government.
Yesterday…
Euro (EUR) Exchange Rate Forecast to Strengthen against the British Pound (GBP) after Mixed UK House Price Data
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced by 0.45% on Monday afternoon.
In response to Greek banks reopening after a three-week unscheduled holiday, the shared currency advanced versus many of its currency rivals. Greek banks managed to reopen thanks to a VAT hike on essential food items. However, capital controls remain in place with citizens only able to withdraw €420 per week.
The common currency further appreciated after news surfaced that Athens gave orders to pay the arrears owed to the International Monetary Fund (IMF), and a loan repayment due to the European Central Bank (ECB) today. Greek officials used the bridge loan organised last week to fund the payments to creditors.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.6937.
Pound Sterling (GBP) Exchange Rate Forecast to Decline against the Shared Currency (EUR) amid Overvaluation Concerns
After having appreciated significantly last week in response to hawkish sentiment from the Bank of England (BoE), the UK asset softened during Monday’s European session. The depreciation is most likely to be the result of traders fearing that the Pound’s high value will be a hindrance to the Monetary Policy Committee (MPC) when making interest rate decisions.
In addition to concerns regarding Sterling overvaluation, the British asset declined as a result of mixed economic data results. July’s Rightmove House Prices came in at 5.1% on the year; bettering the previous 4.5% growth. However, on the month July’s House Prices only gained by 0.1% which was significantly lower than the previous month’s growth of 3.0%. Another contributing factor to the Pound’s depreciation was news that Barclays intends to cut a number of British jobs.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.6937 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Gains on Lack of Data
Given the lack of influential domestic data to provoke changes, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold gains for the remainder of Monday’s European session. EUR/GBP trade has the potential to be relatively subdued on Tuesday with an absence of influential domestic data to provoke volatility.
It is worth noting that in the long-term, however, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to soften considerably. This is due to traders shifting focus from geopolitics to quantitative easing.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.6977 today.