Newsflash: Pound Sterling to Euro (GBP/EUR) Exchange Rate Holds 1.40 before Services Data
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.40 on Friday ahead of the release of the UK’s Services PMI.
The measure of the services sector is expected to print at 57.5 in June, up from 56.5 in May. If that estimation proves accurate the Pound may climb ahead of Sunday’s referendum.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast to trend below the seven-year highs of 1.43 struck earlier this week ahead of Sunday’s Greek referendum.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Pound Moves Further away from 1.43, GBP/USD Dips after UK Manufacturing Flop amid Tsipras Greek Bailout Rumours
At the beginning of this week the odds of a ‘Grexit’ occurring were higher than they’ve ever been and the Pound Sterling to Euro (GBP/EUR) exchange rate accordingly surged to an over seven-year high (and 2015 best) of 1.43.
The pairing last came close to such levels in January when the Swiss National Bank (SNB) scrapped its cap with the Euro and the European Central Bank (ECB) announced its intentions to roll out quantitative easing.
However, as the week’s progressed the Euro has steadily recouped losses against its British rival and the GBP/EUR pairing is now trending just below 1.41.
The Pound was pressured lower against a number of its currency counterparts after the UK’s Manufacturing PMI came in below forecast levels in June, throwing cold water over rising Bank of England (BoE) rate hike expectations.
Rumours that Greek PM Alexis Tsipras was attempting to broker a deal with lenders, with the delay or cancellation of the planned referendum being exchanged for aid, also lent the Euro support.
Euro (EUR) Exchange Rate Forecast: EUR/GBP, EUR/USD Currency Pairs Fluctuate as Germany Says No to Greek Deal, Referendum Ahead
As the European session progressed the Euro to Pound Sterling (EUR/GBP) exchange rate gave up its earlier advance when Germany asserted that a third bailout wouldn’t be discussed with Greece until the results of Sunday’s referendum are known.
Although Tsipras indicated that he would be willing to compromise on issues he was previously vehemently against, its lenders have clearly had enough of the controversial leader’s approach to negotiations.
Tsipras stated that Greece ‘is prepared to accept this staff level agreement subject to the following amendments, additions or clarifications.’
Eurozone finance ministers discussed the Greek PMs proposal via conference call but were in agreement that additional talks won’t be held until after the referendum.
Tsipras Urges Greece to Vote ‘No’ to Austerity Measures in Sunday’s Referendum – Would a Grexit Follow?
Their refusal to come to terms resulted in Tsipras delivering an impassioned speech to the populace in which he implored them to vote ‘no’ on Sunday.
He stated; ‘The sirens of destruction are blackmailing you to say yes to everything without any prospect of exiting the crisis.’
Tsipras went so far as to imply that a ‘no’ vote would increase his negotiating power.
As The Independent notes; ‘Many creditors have firmly told Greece’s popualtion it will be effectively voting on whether the country will remain in the single currency, or even perhaps the EU. But Mr Tsipras insists that a “no” vote to the creditors austerity demands on 5 July will merely prompt a fresh round of talks with creditors – and that a rejection will strengthen his hand.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast: UK House Price, Construction Data Impacts Trading, Greece in Focus and US Jobs/UK Services Numbers Ahead
On Thursday the Pound Sterling to Euro (GBP/EUR) exchange rate registered a decline after the UK’s Nationwide House Price report came in below forecast levels.
UK house prices were forecast to increase by 0.5% on the month in June but actually fell -0.2%.
This resulted in the annual figure plummeting from 4.6% to 3.3%.
However, further Sterling losses were limited after the UK’s Markit Construction PMI improved on estimates by climbing from 55.9 in May to 58.1 in June. A reading of 56.5 had been predicted.
Markit economist Tim Moore observed; ‘UK construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter. Survey respondents cited robust inflows of new work in June, adding to already strong order books across the sector.’
The Eurozone’s Producer Price Index had little impact on the Euro.
As the day progresses Greece will remain in focus and the US Non-Farm Payrolls report could be a catalyst for notable currency market movement.
Before the weekend the GBP/EUR exchange rate will be fluctuating as a result of the UK’s Services PMI. If the gauge of the UK’s most influential sector reveals solid growth, and bolsters Bank of England (BoE) interest rate hike hopes, the Pound could trend higher before Sunday’s crucial vote.
Credit Agricole said of the Euro’s current and potential future performance; ‘In Asian hours risk sentiment was stable with most Asian stock market indices trading higher at the time of writing. When it comes to Greece, PM Tsipras signalled his readiness to accept creditors’ proposals with minor changes yesterday. More importantly, however, new negotiations are unlikely ahead of Sunday’s referendum as indicated by several officials including German chancellor Merkel. Further progress this week can only be made should Tsipras call the referendum back. Nevertheless, even in the case of a more positive development we believe that EUR rallies should be sold, for instance against the USD. This is due to the ECB’s aggressive policy stance and as rising risk appetite would come to the benefit of EUR funded equity investments.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4088, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5611, the Euro to US Dollar (EUR/USD) exchange rate was trending in the region of 1.1081 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7098.
