UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.20% on Tuesday morning.
Despite the fact that there are mounting concerns that the Greek Prime Minister Alexis Tsipras will not be able to convince his government to agree to the deal agreed to unlock aid, the shared currency edged higher versus many of its peers. The appreciation can be linked to fears that Monday’s depreciation was overdone. In addition, German inflation data met with expectations which aided the Euro uptrend.
The Pound, meanwhile, declined versus many of its peers as traders await inflation data. The Consumer Price Index is forecast to hit 0.0% which is dangerously close to deflationary territory.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7110.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate dived by around -1.01% on Monday afternoon.
Euro (EUR) Exchange Rate Forecast to Soften against the Pound (GBP) on Vague Greek Deal
Although European officials and Greek Prime Minister Alexis Tsipras have agreed a deal to keep the Hellenic nation in the Eurozone, the general vagueness of the negotiations has prevented a shared currency appreciation. Many are unconvinced that Tsipras will be able to persuade his government to accept a deal which is likely to include harsher austerity measures than those rejected by 61% of the country in the recent referendum.
In addition to speculation that Tsipras will struggle to convince the Greeks to accept the deal, German Chancellor Angela Merkel will have difficulty convincing her government. The deal is likely to include some form of debt restructuring which could be a sticking point with German officials. The relationship between Greece and Germany has deteriorated to such an extent that many traders are hesitant to invest amid fears that the deal will not come to fruition.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7114.
Pound Sterling (GBP) Exchange Rate Forecast to Hold Gains against the Common Currency (EUR) on UK Mortgage Demand
The Bank of England’s (BoE) quarterly Credit Conditions Survey reported a surge in demand for mortgages in the second-quarter and is expected to remain robust over the summer. The report also highlighted increasing demand for loans from both small and large businesses. Demand from small businesses reached its highest level in a year and respondents predict demand to increase in the third-quarter.
‘Mortgage approvals for house purchase were higher in April and May than the average in Q1 and the net flow of mortgage lending increased slightly in the three months to May. This is consistent with the increase in demand for secured lending reported in the 2015 Q2 Credit Conditions Survey. Mortgage rates fell slightly further and remained at historically low levels. Unsecured credit continued to grow robustly,’ stated the Bank of England report.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7104 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses on Greek Pessimism
Given that there are still so many hurdles to jump before investors are convinced that Greece will remain a member of the currency bloc, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to hold losses. General pessimism that Greece will be able to stick to the reforms promised is also weighing on demand for the common currency. With a lack of influential domestic data to provoke changes, geopolitical developments are likely to cause EUR/GBP movement.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7202 today.
