UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.3% on Thursday morning.
As traders await British economic data, the Pound edged higher versus many of its currency peers. This is likely to be due to traders expecting positive retail sales given the UK’s combination of ultra-low interest rates and accelerated wage growth.
The Euro, meanwhile, strengthened versus its major peers in response to Greek MPs having accepted a second package of reforms in order to receive bailout funds. Prime Minister Alexis Tsipras won a majority thanks to the opposition vote, but he has openly slated the deal stating that the Hellenic nation has no other choice but to accept creditor’s demands.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4239.
Yesterday…
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen as Rate Hawks Predict August Liftoff
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.8% on Wednesday afternoon.
After minutes from the most recent Bank of England (BoE) policy meeting showed that all 9 policymakers voted unanimously against hiking the cash rate, the Pound edged higher versus its major peers. This is due to the fact that the minutes showed that the main stumbling block was the geopolitical upheaval in Greece. Now that it looks as if Greece will accept terms for a third bailout package, there is a high potential for the August interest rate decision to see dissenting policymakers arguing for an immediate rate increase. The minutes showed that some members of the Monetary Policy Committee (MPC) were concerned about medium-term inflation risks, indicating that these MPC members were considering voting for a rate hike, but the situation in Greece made the option too risky at the time.
The minutes stated; ‘For these members, the uncertainty caused by recent developments in Greece was a very material factor in their decisions: absent that uncertainty, the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4340.
Euro (EUR) Exchange Rate Forecast to Soften against the British Pound (GBP) as Greek MPs Prepare to Vote on Second Package of Reforms
The shared currency declined versus many of its currency rivals on Wednesday morning amid renewed uncertainties regarding the third bailout package offered to Greece. Greek MPs gather tonight in order to discuss the second program of reforms demanded by creditors in order to unlock financial aid. Greek Finance Minister Euclid Tsakalotos has urged Greek MPs to accept the deal so proper negotiations can begin on Friday. ‘It’s extremely important to wrap up this prior actions procedure so that we can start negotiations on Friday.’
Not only does tonight’s vote decide whether Greece is prepared to accept harsh austerity measures in return for bailout funds, but it will highlight just how much authority Prime Minister Alexis Tsipras has left after a long and gruelling campaign to unlock aid. ‘Each week appears to bring with it another post-threatening obstacle for the Greek PM, and with talks circulating that Tsipras might call a snap-election in the next few months, this vote is another chance for the global public to see how stable his position actually is,’ stated Connor Campbell of SpreadEx.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4207 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains ahead of Greek Vote
Given the absence of further influential domestic data publications to drive changes, and with mounting concern surrounding the Greek vote tonight, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session. Thursday will be significant for the GBP/EUR pairing with several British data publications due for release. Of particular significance will be retail sales to see whether the combination of ultra-low interest rates and accelerated wage growth has spilled out into the retail sector.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4357 today.