The Euro to Pound Sterling (EUR/GBP) exchange rate softened on Monday as the failure of talks between Greece and its creditors heightened worries of a default and possible ‘Grexit’ from the Eurozone.
The Euro to Pound Sterling (EUR/GBP) Exchange Rate was trading in a range of 0.7202 to 0.7250
A gulf remains between Athens and its creditors and both sides are unwilling to compromise on key reform measures. A meeting held on Sunday lasted just half an hour before both sides gave up and walked out. The defiant tone of the Syriza led coalition government offers little hope that Athens will be the side to back down.
‘The position of Greece and the Greek government is clear. For so many years Greeks have been forced to endure misery because of the failed policies that lenders imposed. These policies aren’t going to continue, we are not going to surrender democracy, nor our parents, the Greek men and women pensioners who are now living under the poverty line. We have made a huge effort to find a solution. It is now up to them,’ said Greek Defense Minister and leader of coalition partner Anel, Panos Kammenos.
Strengthening Euro (EUR) Exchange Rate Will Threaten Eurozone Recovery Warns Bundesbank
Adding to the growing sense of urgency were comments made by the German central bank. The Bundesbank said that time is running out the debt ridden nation and urged the government to take action to avoid a default that could see it be forced out of the Eurozone.
‘Time is running out for Greece. The willingness to do a deal and act is lacking. We need to ensure that Greece can stand on its own two legs without the help of partners. That’s why the ball is clearly in the court of the Greek government,” said Jens Weidmann, the head of the bank.
Weidmann also warned that high debt and the tax burden on businesses and households could harm growth in the Eurozone. The bank also warned that an appreciation of the Euro could threaten the region’s economy.
‘If the Euro were to appreciate strongly, the result would be downside risks for the economy,’ the bank said in its monthly report.
The comments echo the comments made by German chancellor Angela Merkel last week.
The chancellor said that she supported the loose monetary policy measures being used by the European Central Bank as they were preventing the single currency from jumping.
Better-than-forecast Eurozone trade balance data did little to send the Euro higher.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast
The Euro to Pound exchange rate will likely experience movement later in the session due to a speech being made by ECB President Mario Draghi to the European Parliament.
Looking ahead to tomorrow’s session the Pound could move higher if the latest UK inflation data comes in positively.