The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.34% on Tuesday morning, whilst the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within a tight range.
The Pound slumped considerably late on Monday evening after Bank of England (BoE) Chief Economist Andy Haldane warned against an early benchmark interest rate hike. However, the British asset recovered some of its losses thanks to better-than-expected Consumer Confidence in June.
The Euro, meanwhile, continues to trend lower versus its peers amid geopolitical anxieties in Europe. Greece has a large International Monetary Fund (IMF) payment which they are almost certainly not going to be able to make.
The US Dollar softened versus many of its peers as Monday’s poor data results is weighing on bets as to the timing of a Federal Reserve interest rate increase. Safe-haven demand has seen the US asset avoid a larger declination, however.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4067.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5716.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange was trending within a limited range on Monday afternoon whilst the Pound Sterling to US Dollar (GBP/USD) advanced by around 0.17%.
British economic data published on Monday morning was largely negative and the Pound softened versus the majority of its peers. The currency had already recorded modest losses due to profit taking after a recent Sterling surge opened up some attractive selling positions.
The Euro, meanwhile, dived across the board after Greek Prime Minister Alexis Tsipras called for a referendum on the austerity measures Greece’s creditors are pushing for. Greek banks have closed after the European Central Bank (ECB) refused to increase the level of life-support, and capital controls have been imposed to avoid complete financial meltdown.
The US Dollar advanced versus its peers in response to the Greek crisis as traders flocked towards safe-haven assets. However, the gains were short-lived after US Pending Home Sales data declined well beyond expectations.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4106.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is currently trending in the region of 1.5769.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Edge Higher as Greek Banks Risk Insolvency
British economic data produced mixed results on Monday. May’s Net Consumer Credit just missed the median market forecast 1.1 billion, with the actual result dropping to 1.0 billion. More significantly, Mortgage Approvals massively missed estimates in May, with the actual result hitting 64,400 instead of the 68,600 forecast and April’s figure being negatively revised. However, Net Lending Securities on Dwellings, M4 Money Supply and M4 Ex IOFCs 3M Annualised all bettered previous figures in May.
The Euro, meanwhile, dived across the board after the situation in Greece worsened considerably. Tsipras has called for a referendum on the proposed austerity measures from creditors to be held days after the bailout period is due to end and a large consolidated International Monetary Fund (IMF) payment is due. Greek banks have now closed and capital controls have been imposed in order to avoid a complete financial meltdown. The likelihood of a forced Greek exit from the Eurozone has increased significantly.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within the region of 1.4115 – 1.4297.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Trend Higher despite Safe-Haven Demand
The situation in Greece has cased trader risk-appetite to dampen considerably and as a safe-haven asset, the US Dollar advanced versus many of its currency rivals in response. This is likely to be a difficult pill for the Federal Reserve to swallow as the high value of the Dollar is weighing on Federal Open Market Committee (FOMC) policy decisions.
Recent US data has produced comparatively poor results, marked last week by a slowdown in services growth. The succession of weak ecostats has caused many to speculate that the Bank of England (BoE) will overtake the Fed with regards to hiking the benchmark interest rate. US Pending Home Sales, added to this feeling having missed estimates in May.
The Pound Sterling to US Dollar (GBP/USD) exchange rate was trending within the range of 1.5681 – 1.5744.
