The EUR GBP exchange rate continued falling today as the ongoing crisis over Greece’s debt remained a thorn in the side of the Eurozone.
Euro Pound (EUR GBP) Slides as ESM Freezes Greek Debt Negotiations
The Euro Pound (EUR GBP) exchange rate has tumbled as the European Stability Mechanism (ESM) announced yesterday that it would be putting Greek debt relief on hold after it felt Greece was not meeting its commitments.
The current dispute with Greece has arisen from Prime Minister Alexis Tsipras’ decision to spend €617m on benefits for pensioners over the winter, without consulting his creditors, despite meeting its targets to run a 1.5% budget surplus last year.
This has led to increased fears that the crisis in Greece could flare up again, dragging on the Euro as investors fear the possibility that the beleaguered Greek economy could fail.
Sterling Sentiment Mixed after Dovish BoE Meeting
The Pound has found itself flat against Euro this afternoon following a mixed reaction to the Bank of England’s (BoE) latest policy meeting.
While markets were pleased by the announcement that the Bank would not be lowering interest rates from a record low of 0.25%, or increase its asset purchases past $435bn, investors were notably concerned by the BoE’s dovish outlook for 2017.
The Monetary Policy Committee (MPC) lowered its inflation predictions for next year due to the recent recovery seen in Sterling, dashing hopes that an accelerated inflation rate could cause the central bank to hike interest rates next year.
EUR GBP Exchange Rate Forecast: Eurozone Inflation Ahead
The Eurozone will release its latest Consumer Price Index tomorrow, although it is unlikely to make any major impact on the EUR GBP exchange rate as analysts expect the inflation rate to remain at 0.6% in November.
Moving forward to next week Britain will release its final GDP report for 2017 which could cause the Pound to rise further against the Euro as investors expect it to rise from 2.1% to 2.3% in the third quarter.
Meanwhile, looking longer term the Pound faces the prospect of the mortgage market plateauing over the next two years as the Council of Mortgage Lenders (CML) warns that home buyers are being put off from borrowing more.
Current Interbank Exchange Rates
At the time of writing the EUR/GBP exchange rate was trending around 0.83 and the GBP/EUR exchange rate was trending around 1.19.
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