The Pound Sterling to Euro (GBP/EUR) exchange rate was softer on Friday as comments made by German Chancellor Angela Merkel supported the single currency. The Pound Sterling to US Dollar (GBP/USD) exchange rate remained stronger following the release of more disappointing US data.
The Pound Sterling to Euro (GBP/EUR) Exchange Rate Was Trading In the Region Of 1.3895
German Chancellor Angela Merkel said on Thursday that everything must be done to prevent Greece running out of money. The comments were enough to increase optimism that a deal will be reached between Athens and its creditors before the country runs out of cash. After the chancellor’s comments the Euro rose to its best level in two weeks against the US Dollar.
Adding to the sense of optimism were comments made by Austrian Finance Minister Joerg Schelling. The minister said that despite there being little in the way of progress in negotiations a Greek exit from the Eurozone should be ruled out.
Despite that, the Euro is forecast to remain under heavy pressure throughout the session and the next few weeks as economists doubt that any deal will be reached at today’s meeting in Riga. Other ministers and economists do not share the views of Mr Schelling. Manfred Webber the leader of the centre-right European People’s Party (EPP) the biggest political group in the European parliament said that expectations for a ‘Grexit’ were growing.
‘Today there are more serious discussions about a Grexit. Today, it’s the case that the entire Eurozone stands against Greece. Germany is not isolated…Greece is isolated,’ said Webber.
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German Data Supports Euro Exchange Rate
Market attention will be fixed on the meeting in Riga and depending on how it goes the Euro is expected to experience volatility throughout the day.
Earlier in the session, the Euro also found support from data, which showed that German business confidence jumped to its strongest level in 10-months in April. The Ifo institutes business confidence climate index rose for a sixth month in a row from March’s 107.9 to 108.6. Economists had been forecasting for a figure of 108.4.
‘I’m optimistic about the German economy. The lights are on green, the Euro is low, energy prices have dropped. The biggest source of uncertainty for Europe now is the situation in Greece. That could cause some disruption if it doesn’t evolve as we all hope,’ said the senior economist from ABN Amro Bank.
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate Hit A Session High of 1.5145
The Pound advanced against the US Dollar after the US currency was weakened by more disappointing economic data on Thursday.
Weaker-than-forecast US jobless claims and new home sales came in below expectations, leading to economists raising their bets that an interest rate rise by the Federal Reserve will now not occur until later in the year.
The ‘Greenback’ could claw back some lost ground later in the session if the latest Durable Goods data comes in positively. Another poor result however, and we can expect the Dollar to slide further.