The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.38% on Wednesday morning.
After Greece failed to make the consolidated International Monetary Fund (IMF) payment, the shared currency crashed. The Hellenic nation is the first developed country to miss a payment to the international creditors. Although Prime Minister Alexis Tsipras is wrangling for a new deal, the likelihood of a forced Greek exit from the Eurozone has increased significantly. The forthcoming referendum to decide whether to accept austerity proposals may come to nothing as Greece’s options are wearing thin.
The Pound, meanwhile, edged higher versus many of its peers ahead of manufacturing data. Bank of England (BoE) Governor Mark Carney is due to make a speech later in which he will address the situation in Greece and the effect that might have on the UK. Many believe that he will be confident that the fallout will have a minimal effect on the UK, not least because the central bank has already taken steps to safe-guard against such an event.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4139.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.65% on Tuesday afternoon.
After Bank of England (BoE) Chief Economist Andy Haldane warned against the risk of an early rate hike (and stated that major economies are still suffering from ‘lasting and durable’ psychological scars from the recent recession) the Pound slumped versus its major peers. The British asset recovered some of its losses on Tuesday morning, however, thanks to better-than-expected UK consumer confidence in June.
The Euro, meanwhile, continues to trend lower versus its rivals amid geopolitical upheaval in Greece. With a large International Monetary Fund (IMF) payment due, which the Hellenic nation will almost certainly fail to pay, the Euro is likely to continue trending bearishly during Tuesday’s European session.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4105.
Pound Sterling (GBP) Exchange Rate Forecast to Advance against the Shared Currency on British Consumer Confidence
As explained above, the Pound slumped in response to comments issued by the BoE’s Chief Economist on Monday. Haldane stated that there is just as much likelihood that the bank will cut the cash rate as raise it and remarked; ‘A policy of early lift-off could be self-defeating. Looking ahead, I have no bias on either the size or the direction of future interest rate moves.’ This is not the first time Haldane has made such comments, though his previous hints were somewhat dismissed by policymakers.
The Pound managed to recover some of its losses during Tuesday’s Australasian session, however, thanks to better-than-expected domestic data. June’s GfK Consumer Confidence Survey was forecast to tick higher from 1 to 2, but the actual result jumped to 7. ‘We’re seeing a dramatic uptick in confidence this month, a real post-election bounce that’s put a spring in the step of consumers across the UK,’ said Joe Staton, an executive at GfK.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4014 today.
Euro (EUR) Exchange Rate Forecast to Soften against the UK Asset ahead of Greece IMF Repayment
Having opted to consolidate June’s payments to the IMF, Greece must pay a significant amount today. However, as likelihood of Athens making the payment is slim-to-none, the deadline is likely to weigh on investor sentiment amid speculation of a forced Greek exit from the Eurozone. Greek Prime Minister Alexis Tsipras remains defiant however, believing the European Union wouldn’t risk a Grexit. Tsipras organised a rally in the capital in order to push for a ‘no’ vote to the austerity measures proposed by creditors.
No matter how the Greek people vote, the future is uncertain and likely to hinder investment.
European economic data produced mixed results on Tuesday, but the reports have not been particularly impactful with the Greek crisis dominating trader focus. The German Unemployment Rate held in June and Unemployment Change fell short of forecasts. German Retail Sales also slumped on the year in May, but monthly sales eclipsed the median market forecast.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Trend Higher as Greece’s Crisis Worsens
Given the extent of the unknowns regarding Greece’s future in the Eurozone, and with the European ethos being called into question as the monetary union crumbles from within, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to continue trending higher over the course of Tuesday’s European session.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4078 today.