The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.30% on Thursday morning.
After British economic data showed house prices declined in June, the Pound softened versus many of its peers. Construction data, due for publication later on Thursday morning, has the potential to provoke Sterling volatility.
The Euro, meanwhile, recovered some of its losses from a bearish week despite ongoing geopolitical upheaval in Greece. The appreciation can be linked to optimism that Greece will stay as part of the currency bloc no matter the result of the referendum.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4091.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a narrow range on Wednesday afternoon.
After Greece became the first developed nation to unintentionally defer on a payment owed to the International Monetary Fund (IMF), the single currency dived versus its major rivals. Many fear that Greece will be forced to leave the Eurozone even if citizens vote yes to austerity in the forthcoming referendum. The fallout from such an unprecedented event is difficult to predict and has had a marked impact on investor confidence.
The Pound, meanwhile, softened in response to lower-than-expected manufacturing output. However, Sterling recovered some of its losses after Bank of England (BoE) Governor Mark Carney stated that the UK was secure in the event of a a Greek exit. The Pound also found support after UK miner Sirius Minerals Plc was given the green light to build a $3 billion potash mine. The company say that the new facility will create more than a 1,000 jobs and add $1.6 billion a year to the British economy.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4092.
Pound Sterling (GBP) Exchange Rate Forecast to Edge Higher against the Common Currency after Carney Speech
The British asset gained versus the majority of its competitors on Wednesday thanks to traders digesting positive domestic data from Tuesday and the impact it may have on rate hike projections. Aiding the Pound’s appreciation on Wednesday was news that a large UK miner has been given permission to build a very large potash mine which could be beneficial for the British economy. ‘This is really just the beginning for the company,’ Chris Fraser, the chief executive officer of Sirius, said in a statement. ‘We have made a major step forward and now have a pathway to reaching production and unlocking ever more value for our shareholders.’
However, UK Manufacturing PMI was forecast to advance from 51.9 to 52.5, but the actual result dropped to 51.4. This may cause the Pound to depreciate as traders digest the numbers. Rob Dobson, Senior Economist at survey compilers Markit, stated; ‘The UK manufacturing sector had a disappointing second quarter overall. Growth trends in output and new orders were the weakest since the opening quarter of 2013, as a strong Sterling exchange rate and subdued demand from mainland Europe offset the continued solidity of the domestic market.’
The British asset managed to avoid a large depreciation, however, thanks to a positive speech from BoE Governor Mark Carney after the UK Financial Stability report was published. ‘The United Kingdom is relatively well insulated from the direct consequences of events in Greece,’ Carney said.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4081 today.
Euro (EUR) Exchange Rate Forecast to Trend Lower against the Pound ahead of Eurozone Teleconference to Discus Greek Proposals
After having deferred payment to the IMF Greece has become the first developed nation to fail to pay international creditors. This has serious ramifications, not least because the IMF will not provide any aid until the arrears have been taken care of. The likelihood of a Grexit has increased exponentially given that Euro-area officials will be reluctant to accept any new proposals from the Hellenic nation after five-months of fruitless negotiations.
Greece has requested a two-year bailout programme under the European Stability Mechanism, which is essentially Europe’s bailout fund. Although Euro-area officials are set to discuss the proposal, there is a high likelihood that any attempt to receive a bailout will be rejected prior to the scheduled referendum on austerity.
European data has had minimal impact on the shared currency with trader focus dominated by the Greek crisis.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Edge Higher on Carney Speech
Given the extent of the crisis in Greece and the marked impact it’s having on investor confidence, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to tick higher, not least because of the positive Carney comments. Greek geopolitics is very likely to dominate GBP/EUR trade for some time to come as uncertainties regarding Greece’s future outweigh domestic data results.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4154 today.
