The Pound Sterling to Euro (GBP/EUR) exchange rate began Thursday’s European session trending lower as investors hoped Greece was close to a deal, while the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed higher ahead of UK Gross Domestic Product (GDP) stats.
Greece Claims Deal is Close, German Finance Minister ‘Surprised’ at Optimism – Euro (EUR) Exchange Rate Forecast to Fluctuate
Wednesday saw Greek Prime Minister Alexis Tsipras state that the nation was close to a deal, a move that saw the Euro (EUR) exchange rate climb. However, not everyone agrees with the optimism from the struggling nation.
German Finance Minister Wolfgang Schaeuble commented: ‘Negotiations between the three institutions and the Greek government still haven’t come very far… [I’m] always a bit surprised that it’s always said in Athens that we stand near an agreement.’
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending lower in the first half of Wednesday’s trading after the GfK German Consumer Confidence Survey hit a 13 and-a-half year high, while the Pound Sterling to US Dollar (GBP/USD) exchange rate climbed ahead of US Mortgage Approvals numbers.
The Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates were both trending lower in the second half of Wednesday’s European trading.
Greece Edges Closer to Deal with IMF and EU Creditors, Euro (EUR) Exchange Rate Climbs
The GBP/EUR currency pair dropped as investors became hopeful that the situation in Greece would soon come to an end, after the Greek government announced that it was drawing up plans for a deal with its creditors.
A Greek government official stated: ‘At the Brussels Group today procedures to draw up a staff-level agreement are beginning. There remains a problem with the differing stance among the institutions. If an agreement by the IMF was not needed, the deal would have closed by now.’
Euro to Pound Sterling (EUR/GBP), Euro to US Dollar (EUR/USD) Exchange Rates Jump as GfK German Consumer Confidence Survey Jumps to 13 and-a-half Year High
The GfK German Consumer Confidence Survey managed to rise to 10.2 in June, rather than falling from 10.1 to 10.0 as forecast. The upbeat ecostat allowed the Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates to trend higher ahead of another day of Greek negotiations.
The Pound Sterling to Euro (GBP/EUR) exchange rate experienced choppy trading on Tuesday as the situation in Greece continued to weigh on the Euro, while the Pound Sterling to US Dollar (GBP/USD) exchange rate sank on upbeat US Consumer Confidence and US Durable Goods Orders data.
US Dollar to Pound Sterling (USD/GBP), US Dollar to Euro (USD/EUR) Exchange Rates Supported by US Consumer Confidence and Durable Goods Orders
The US Dollar (USD) exchange rate has been on a roll since last Friday’s US core inflation ecostat managed to remain steady at 1.8% in April rather than falling to 1.7% as economists had forecast. The upbeat US Consumer Price Index (CPI)spurred hopes that the Federal Reserve may be on course to hike interest rates in the near future.
Analyst Michael Hewson commented: ‘Despite some fairly neutral comments from Fed Chief Janet Yellen late on Friday, markets continue to price in a rate rise sometime this year, with September the next probable date on the back of a slightly stronger-than-expected CPI inflation number at the end of last week.’
Investors had initially forecast a June rate rise, but the latest Federal Open Market Committee (FOMC) minutes have suggested that most policymakers had seen little hope for a June lift-off in the wake of weaker-than-expected US data.
Federal Reserve policymaker Jeffery Lacker is due to speak on financial stability on Tuesday evening which could cause some US Dollar to Pound Sterling (USD/GBP) and US Dollar to Euro (USD/EUR) exchange rate fluctuations.
Meanwhile, Tuesday’s US Consumer Confidence ecostat climbed from a negatively revised 94.3 in April to 95.4 in May. US Durable Goods Orders came in at -0.5% in April as forecast, but the March ecostat was upwardly revised to 5.1%.
Additionally, US Durable Goods Excluding Transportation registered 0.5% growth in April rather than the 0.3% prediction, and Durable Goods Orders Excluding Non-Defence Aircraft hit 1.0% in April, a massive improvement on the 0.3% forecast.
Greek IMF Payment Speculation Causes Choppy Euro to Pound Sterling (EUR/GBP) Exchange Rate Trading
Meanwhile, the Euro (EUR) exchange rate has been trending lower on account of ongoing negotiations between Greece and its creditors. The nation is forecast to run out of funds by June and could potentially default on its June 5th International Monetary Fund (IMF) repayment.
However, as speculation heightens, some industry experts have suggested that Greece may be able to consolidate all of its payments together for the month of June and repay them at the end of the month. Greece will have to pay back a total of 1.6 billion Euros in June and is unlikely to be able to make the payment without help from its Eurozone creditors.
One senior Eurozone official stated: ‘There is the possibility of putting together several payments that Greece would need to make to the IMF in the course of June and then just make one payment.’
Another official also suggested that the consolidation of payments was a possibility, saying: ‘That’s basically a technical treasury exercise and they could tell the IMF that this is how they want to do it and the IMF would probably be OK with that.’
Pound Sterling to Euro (GBP/EUR), Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast to Fluctuate on UK/US GDP Data
The Pound Sterling to US Dollar (GBP/USD) and Pound Sterling to Euro (GBP/EUR) exchange rates are likely to experience some major movement on Thursday with the release of the UK’s Gross Domestic Product (GDP) ecostat.
The UK economy is expected to register 2.5% growth on the year in the first quarter and if economists are correct, the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD exchange rates could rally.
However, Friday could see things heat up again for the GBP/USD currency pair with the release of US GDP. Annualised US GDP is expected to register a -0.9% contraction in Q1 which could cause the US Dollar (USD) exchange rate to soften. Personal Consumption data will also be out and is forecast to rise from 1.9% to 2.0% in Q1.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.5382; the Pound Sterling to Euro (GBP/EUR) exchange rate is trending in the region of 1.4134.