The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened to 1.39 on Monday due to investors growing jittery over the Greece situation.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a session high of 1.3922
With Eurogroup ministers, meeting Brussels the market is concerned that the group will reject the Greek reform plans delivered to the group last month. Nerves rose over the weekend as a number of European ministers said that the reform ideas do not go far enough to warrant the release of much needed funds. If the reforms are rejected then doubts over Greece’s place in the single currency bloc are likely to increase.
The Syriza led Greek government threatened that new elections or a referendum on the nation’s fiscal policy could be called if the Eurogroup rejects the proposals.
The comments increased pressure ahead of the meeting and prompted Germany to react angrily. Steffen Kampeter warned Greece that any referendum would slow down the nation’s reform drive.
Jeroen Dijsselbloem, the President of the Eurogoup warned Greece to stop wasting time and said that Athens proposals are ‘far from complete’.
‘We seem to be losing time now- since the last Eurogroup little has been done in terms of future talks, in terms of implementation. The key issue now is not to waste any more time,’ Dijsselbloem said prior to the start of the meeting.
Also weighing upon the single currency was the release of data from Germany, which showed that the Eurozone’s largest economy saw its trade surplus shrink in January. The nation’s exports declined by 2.1% and imports fell by 0.3%. The country’s overall surplus for the month fell from €21.6 billion to €19.7 billion. Germany’s current account balance, a broad measure of an economy’s international financial position, showed a surplus of €16.8 billion in January after €25.6 billion in December. January’s figure was above the €15 billion seen in the economists’ survey.
As attention focused on the Eurogroup meeting, investors widely ignored the release of the latest Sentix Investor sentiment report which showed that investor sentiment across the 19-member currency bloc rose to a seven-year high. The Sentix index of investor confidence improved to 18.6 this month, from a reading of 12.4 in February. Analysts had expected the index to improve to 15.0 in March.
On the index, a level above 0.0 indicates optimism, below indicates pessimism.
The Euro was also influenced by the launch of the ECB’s quantitative easing programme.