The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a narrow range on Tuesday morning.
As traders await British inflation data, due for publication later on Tuesday morning, the Pound is generally trending lower versus most of its major peers. This is likely to be as a result of speculation that inflation will move into negative territory.
The single currency, meanwhile, softened versus the majority of its most traded currency rivals with geopolitics in Greece still dominating trader focus. Relatively positive German Wholesale Price Index data wasn’t enough to overshadow concerns regarding the potential for a Greek exit from the Eurozone.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3885.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by around 0.47% on Monday afternoon.
As the forthcoming British general election weighs on investor confidence amid speculation of a major policy overhaul, the Pound softened versus many of its major peers. However, geopolitical tensions in Greece and poor trade data out of China has seen Sterling advance versus most risk-correlated currencies.
The Euro, meanwhile, softened against the majority of its major peers on Monday. This is as a result of the relationship between Greece and the Eurogroup dissolving rapidly as Eurozone members complain openly about Athens’ lack of detail with regard to their reform proposals.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3878.
Pound Sterling (GBP) Exchange Rate Fluctuates on Lack of Data
Given that there has been a complete absence of British economic data on Monday to provoke Sterling volatility, the Pound has seen changes as a result of fluctuations in the wider currency market. With market sentiment dictating trade as geopolitics in Europe and poor Chinese data results weigh on risk-appetite, the Pound strengthened versus high-yielding and risk-correlated assets.
However, the Pound softened versus many of its major peers in response to traders’ reluctance to invest in Sterling ahead of the general election. With opinion polls not indicating any clear frontrunner, and with the potential for a dramatic policy change with regards to Britain’s future in the European Union, the Pound is unlikely to sustain any significant gains until the conclusion of the election.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3754 today.
Euro (EUR) Exchange Rate Dives on Grexit Speculation
After Greece managed to meet an initial loan repayment to the International Monetary Fund (IMF) last week, the shared currency strengthened as fears of a Greek exit from the Eurozone eased somewhat. However those anxieties were quickly reignited after the Eurogroup responsible for the decision as to whether the cash-strapped country receives a bailout demanded a much more detailed reform proposal.
IMF managing director Christine Lagarde said last week that talks between Greece and its creditors had been ‘difficult on almost a daily basis.’ She added: ‘What really matters now is for Greece and the three institutions to get on with the work so we can identify together the measures that will take Greece out of the very bad economic situation it could be in if those measures are not taken.’
Many are already questioning the likelihood that Greece will be able to make further repayments due to creditors after only just managing the initial IMF payment. ‘It is difficult to assess just how close Greece currently is to the abyss,’ Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said in a note Monday.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains
Given the complete absence of domestic data pertaining to either nation to curb the trend, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of the European session.
Tuesday is likely to see significant GBP/EUR volatility with several influential data publications pertaining to both Europe and the UK due. Of particular note will be British inflation data considering Bank of England (BoE) policymakers stated that improving inflation was needed before they consider a cash rate increase.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3878 today.
