UPDATE
The Pound Sterling to Euro (GBP/EUR) exchange rate edged higher by around 0.11% on Tuesday afternoon. The appreciation was the result of positive comments from Bank of England (BoE) Governor Marley Carney, who stated that low inflation was only temporary and he believes inflation will pick up towards the end of the year.
The Euro, meanwhile, declined versus some of its rivals as Greek Prime Minister Alexis Tsipras attempts to persuade his government to accept a deal which includes harsh austerity measures. However, the International Monetary Fund (IMF) has warned Europe that Greece’s debt is not currently sustainable and can only get worse unless a large portion is relieved.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4104.
Previously…
The Pound Sterling to Euro (GBP/EUR) exchange rate softened by around -0.50% on Tuesday morning.
Pound Sterling (GBP) Exchange Rate Forecast to Decline against the Shared Currency (EUR) after Flat-line Consumer Prices
Having appreciated significantly on Monday following a positive Credit Conditions Survey from the Bank of England (BoE), the Pound softened on Tuesday. The depreciation can be linked to June’s Consumer Price Index, which dropped to 0.0% on both the year and the month. In addition, the Core Consumer Price Index declined from 0.9% to 0.8% on the year despite predictions core inflation would hold steady in June. BoE Governor Mark Carney had previously warned that inflation is likely to remain low in the short-term.
‘Inflation has continued its pattern of recent months, when prices have been very little changed on the previous year,’ said Philip Gooding from the ONS. ‘The headline rate for June has dropped very slightly on May, back to zero, thanks to small downwards effects from movements in clothing and food prices and air fares.’
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4039.
Euro (EUR) Exchange Rate Forecast to Edge Higher against the British Asset (GBP) despite Syriza Concerns
Tuesday has seen the shared currency advance versus many of its peers after a significant depreciation on Monday. This is likely to be the result of traders fearing that the depreciation was overdone. However, there is no escaping the fact that Greece’s position in the Eurozone is standing on thin ice as Prime Minister Alexis Tsipras attempts to persuade radical-left Syriza party members to agree to a deal which opposes everything they stand for. The fact that the new deal includes harsher measures than the proposal rejected by the country during the referendum only exacerbates turmoil within the Greek government.
Mixed economic data results have had minimal impact on the Euro as traders await news regarding Tsipras’ attempts to persuade his government to back the deal. However, a significant drop in Eurozone Economic Sentiment in July may have a detrimental impact as the European session progresses.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.4009 today.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Losses ahead of News from ECOFIN
European Union Finance Ministers gathered today to discuss the possibility of temporary financial aid for Greece as they implement reforms which will unlock the full bailout package. However, several ministers have objected to the use of emergency funds to support the Hellenic nation, including British Chancellor George Osborne. Until more is known as to the viability of short-term aid for Greece and whether Tsipras will be able to persuade his party to agree to the new deal, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold losses.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4096 today.