UPDATE
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a limited range on Friday morning.
Fractionally ahead of schedule, Geek Prime Minister Alexis Tsipras’ government submitted reforms to Eurozone officials in the hope of unlocking financial aid. The proposal is likely to cause trouble back home, however, given that it includes harsher austerity measures than that of the proposal rejected by the Hellenic nation in the referendum. There is also the matter of gaining the approval from Germany which is by no means a given, especially when you consider the sticky issue of debt relief. The shared currency advanced in response to renewed optimism that Greece would secure a deal, although the appreciation has been somewhat sluggish due to the issues raise above.
The Pound, meanwhile, strengthened versus its major rivals as traders continue to readjust positions in an attempt to rectify unjust declination. Although the Pound dived in response to Chancellor George Osborne having cut 2015 growth forecasts, the budget was generally hawkish. Trade data, due for publication later on Friday morning, will be of significance to see whether geopolitical upheaval in Europe has impacted on British exports.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7194 today.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate declined by around -0.44% on Thursday afternoon.
Euro (EUR) Exchange Rate Softens against the Pound (GBP) ahead of Greek Reforms Submission
Today marks a significant deadline for Greece in that the nation will be required to present a fresh program of reforms to European officials, the first proposal submission following the 61% ‘no’ victory in the austerity referendum. The reforms are likely to be similar to those proposed prior to the referendum, although the urgency in which Greece requires financial aid could see some concessions made on previously untouchable electoral red lines. Hellenic nation officials are likely to barter for debt relief, however, especially since the International Monetary Fund (IMF) recommended wiping a portion of Greek debt in order to foster sustainable recovery. Debt relief is a sticky subject amongst many European officials, especially those who represent countries which have had to pay back huge sums to creditors.
‘Greece is in a situation of acute crisis, which needs to be addressed seriously and promptly,’ IMF’s Ms Lagarde said. Getting out of that crisis would take both reforms by Athens and ‘debt restructuring,’ she said.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7171.
Pound Sterling (GBP) Exchange Rate Gains against the Shared Currency (EUR) after MPC Rate Decision
The Bank of England’s (BoE) Monetary Policy Committee (MPC) opted to hold the cash rate at the current level. All 41 Bloomberg economists surveyed predicted the central bank would maintain the rate at the current record-low 0.5%. With the Greek situation causing heightened uncertainty, not least as to the extent of UK contagion, policymakers will avoid hiking the cash rate for some time to come. The highly overvalued Pound is also weighing on policy decisions.
The Pound advanced versus many of its competitors on Thursday thanks to better-than-expected domestic data. The RICS House Price Balance was forecast to increase from 34% to 36% in June, but the actual result reached 40%. The large increase in house prices has been linked to high demand in London, driven by higher wages and cheaper mortgages, with a lack of supply to accommodate the influx. ‘We need a coherent and coordinated strategy to increase supply,’ RICS’s policy chief Jeremy Blackburn said.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7169 today.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Hold Losses ahead of Greek Reforms
Given that the BoE are likely to act in line with analyst predictions, the Euro to Pound Sterling (EUR/GBP) exchange rate will see most volatility as a result of the Greek reforms submission. Athens really has no choice but to submit the reforms on time lest they provoke the bubbling anger of neighbouring officials. Should the reforms fail to address any of the European officials’ demands it is likely that the Hellenic nation will be facing a Eurozone exit and a return to the Drachma.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7223.
