The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.19% on Tuesday morning.
As traders await the British Consumer Price Index data, the Pound is generally holding steady versus most of its peers. Having dropped into negative territory, Bank of England (BoE) officials will be hoping that inflation moves back into positive territory, especially given Governor Mark Carney’s reassurances that the dip into deflation was temporary.
The Euro, meanwhile, edged higher despite ongoing troubles in the Hellenic nation. Many traders feel that the risk of a Greek exit from the Eurozone has been well and truly priced-in, and that the contagion of such an event could be contained.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3808.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range Monday afternoon.
Despite the fact that British economic data printed positively on Monday, the Pound slipped versus many of its closest rivals. This is likely to be the result of traders digesting Standard and Poor’s decision to put the UK’s AAA credit rating on a negative outlook. This decision was in response to fears regarding the fallout from a referendum on Britain’s membership in the European Union.
The Euro, meanwhile, dived across the board as talks between Greece and European officials showed no sign of progress. Many now fear that Greece will not be able to secure bailout funds before Thursday when the credit line dries up.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3826.
Pound Sterling (GBP) Exchange Rate Forecast to Hold Steady versus the Common Currency on House Prices
Standard and Poor’s changed Britain’s outlook from ‘stable’ to ‘negative’ on Friday, causing the Pound to slump versus its major peers. S&P stated that the nation’s AAA credit rating was at risk because of Prime Minister David Cameron’s planned EU referendum. ‘The decision to propose a referendum, with all the economic risks that such a decision entails, was at least partly driven by the government’s intention to contain the influence of the Euro-sceptic UK Independence Party,’ S&P said. ‘We also believe that the referendum is aimed at strengthening unity inside the Conservative Party, which has a strong Euro-sceptic wing.’
British data printed positively on Monday, but the result had minimal impact on the Pound. On the year, Rightmove House Prices increased by 4.5% in June. On the month, June’s House Prices increased by 3.0%. ‘The strong rebound in prices has been exaggerated by some owners of upper-price bracket property returning to the market,’ Rightmove Director Miles Shipside said. ‘Having downed their selling tools in the run up to the election, many have now picked them up again.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3795 today.
Euro (EUR) Exchange Rate Forecast to Soften against the British Asset as Greece Close to Default
European economic data printed positively on Monday, with Eurozone Trade Balance showing the surplus extended beyond expectations. However, the data wasn’t very impactful with the threat of a Greek exit from the Eurozone weighing on investor confidence. Talks between Greek and Eurozone officials seem to be deteriorating rather than making progress.
‘One can only see a political purposefulness in the insistence of creditors on new cuts in pensions after five years of looting under the bailouts,’ Greek Prime Minister Alexis Tsipras told Greek newspaper Efimerida Ton Syntakton on Monday morning. ‘We will wait patiently until the institutions accede to realism,’ he said. ‘We do not have the right to bury European democracy at the place where it was born.’
‘Even if the parties involved do reach a deal in the near future it will likely be a short-term one only,’ said Gary Jenkins of LNG Capital. ‘Indeed the lack of trust suggests that funds will be drip-fed to Greece and that a longer-term agreement will be very difficult to reach.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Steady ahead of UK Consumer Price Index (CPI)
With an absence of further domestic data to provoke volatility, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold steady for the remainder of Monday’s European session. Tuesday will see GBP/EUR volatility with the British Consumer Price Index due for publication. This is of particular significance to see whether the dip into deflation was only temporary, as Bank of England (BoE) Governor Mark Carney reassured investors it would be.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.3878 today.