On Thursday the Euro to Pound Sterling (EUR/GBP) exchange rate firmed as the UK currency was weighed upon by a house-price index which showed price growth slowed for a sixth straight month in November.
The Euro to Pound Sterling (EUR/GBP) exchange rate gave up ground on Wednesday after data out of France showed that industrial production in the Eurozone’s second largest economy fell steeply in October and as concerns increase over the political situation in Greece.
Economists are growing alarmed by the prospect of the left-wing leader Alexis Tsipras slipping into the prime minister’s chair in Athens.
On Tuesday, the Euro to Pound Sterling (EUR/GBP) exchange rate advanced to its highest level in a week as the single currency continued to find support from positive German trade data. The gains for the single currency are forecast to be relatively short lived however as concerns are building over political uncertainty in Greece.
Earlier the Euro to Pound Sterling (EUR/GBP) exchange rate recovered all of Monday’s losses as UK data showed that manufacturing production fell for the first time in five-months and as a report out of Germany was not as bad as forecast.
The Pound weakened against the Euro and the majority of its other most traded peers following the release of the data. According to the Office for National Statistics (ONS) manufacturing production fell by 0.7% in October, wiping out the 0.6% increase recorded in September. The report also showed that industrial production declined by 0.1%, worse than the 0.2% increase forecasted by economists.
The report also showed that 8 out of 13 categories in manufacturing weakened in October as falling demand from the Eurozone and a slowing global economy weighed on demand for UK goods.
The Euro meanwhile received support from better than expected data out of Germany. A report released by Destatis showed that German exports fell less than forecast in October and the country’s trade balance surplus increased from the €18.6 billion recorded in September to €20.6 billion in October.
Greece Concerns Forecast to Weigh on Euro
Further gains for the Euro are unlikely, as economists grow concerned over the situation in Greece. Prime Minister Antonis Samaras chose to bring forward presidential elections, a move that could trigger a general election in Europe’s most indebted nation as early as January. Voting for a New Greek president will take place next week.
Under the Greek constitution, a supermajority of at least 180 lawmakers in the 300-seat parliament is needed to elect a successor to President Karolos Papoulias. The Samaras government has just 155 lawmakers at its disposal. Failure to install a candidate after three attempts would prompt the collapse of the coalition government and lead to the dissolution of parliament.
‘It is a high stake gamble. Snap parliamentary elections in January could then bring left wing Syriza into power in Athens,’ said Holger Schieding, chief economist at Berenberg Bank. An election victory win for Syriza would be seen as Euro negative as the party is opposed to the Greek bailout.
The Euro to Pound Exchange Rates
The Euro to Pound exchange rate hit a session high of 0.7943
The Euro to Pound exchange rate hit a session low of 0.7913
The Euro to Pound exchange rate is trading in the region of 0.7934
