Euro to Pound Sterling (EUR/GBP) Exchange Rate 0.2% Stronger
The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened to 0.7407 ahead of a meeting of the Eurogroup.
The European officials are due to debate the Greek debt situation and hopes that they may come to an accord on the subject are lending the Euro support.
The Pound derived little support from Rightmove House Price data, and today’s Eurozone trade surplus report (which showed an unexpected increase) bolstered the common currency.
Earlier…
The Euro to Pound Sterling (EUR/GBP) exchange rate could fall beyond a seven-year low next week if the Greek debt negotiations continue to falter.
EUR/GBP Exchange Rate Trending Lower as Greek Growth Disappoints
Over the last five days the Euro to Pound Sterling (EUR/GBP) exchange rate has largely been trending in the region of a five-year low as a result of concerns that Greece will not reach an agreement with its creditors on the subject of renegotiating its debt obligations.
Although the initial spike of risk aversion triggered by the Syriza victory has eased, the situation remains highly uncertain.
Early in the week Greek Prime Minister Alexis Tsipras pledged to come to accord which would see Greece remaining part of the 19-nation Eurozone.
He stated; ‘There is a common desire to resolve this crisis. I am optimistic that we will reach a compromise with our European partners.’
However, shortly after this, German Finance Minister Wolfgang Schäuble dismissed Tsipras’ plan for restructuring the nation’s debt.
Wednesday’s seven-hour gathering of Finance Ministers from within the European Union also yielded few results.
On Friday the Euro failed to benefit from better-than-expected fourth quarter growth data for Germany and the Eurozone as a whole as Greece published less-than-spectacular results.
Greece contracted by -0.2% in the final three months of the year after posting growth in the previous three quarters. Political uncertainty was cited as one of the reasons for the result.
That being said, spokesman for the Greek government Gabriel Sakellaridis did comment; ‘We will do whatever we can so that a deal is found on Monday. If we don’t have an agreement on Monday, we believe that there won’t be a problem.’
Greek Finance Minister Yanis Varoufakis might be harbouring slightly different feelings however, as he compared the Troika’s treatment of Greece to the CIA engaging in waterboarding…
He stated; ‘Shortly before the cardiac arrest, we are granted a few breaths of air. Then we are put under water again, and the cycle starts anew.There were also very good people at the CIA when waterboarding was used against their will and therefore were in a terrible moral dilemma.’
Euro to Pound (EUR/GBP) Exchange Rate Forecast
While the ongoing Greek negotiations are likely to be the main cause of Euro movement next week, common currency fluctuations may also be caused by a run of reports for the currency bloc.
Tuesday sees the publication of Germany’s ZEW Current Situation and Economic Sentiment surveys. An improvement in these indexes would be Euro supportive.
On Wednesday the nation will be releasing construction output figures for December. In November output declined by a seasonally adjusted -0.1%. Investors will be hoping for a rebound at the close of 2014.
Current Account and Consumer Confidence data is on the cards for Thursday, but Friday is the big one in terms of European releases.
The day starts with the German Producer Price Index and continues with preliminary Manufacturing, Services and Composite PMI for the Eurozone and its largest economies.
France remained in contraction territory in January, so a return to growth in February would be Euro supportive. Similarly, if the measures for Germany and the Eurozone as a whole push further above the 50 mark separating growth from contraction, the Euro may enjoy a little boost before the weekend.
Of course, the UK’s economic reports will also have an impact on EUR/GBP trading. Positive UK fundamentals would support the argument in favour of a Bank of England (BoE) interest rate increase taking place in 2015 and keep the Pound trending higher.
The main data to be aware of includes the UK’s employment stats (due out on Wednesday) and Friday’s retail sales report.
On Sunday the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7385
