The Euro to Pound Sterling (EUR/GBP) exchange rate declined in Monday’s European trading as a result of Grexit fears, despite a surge in Eurozone Economic Confidence; the Euro to US Dollar (EUR/USD) and Euro to Swiss Franc (EUR/CHF) exchange rates were also trending lower.
The prospect of Greece leaving the Eurozone could have a major impact on the Euro exchange rate as the damage to the currency bloc’s economy remains relatively unknown. Greece was expected to submit reform proposals today but Germany has warned that the nation still hasn’t issued anything.
German FinMin spokesperson: #Greece hasn't submitted proposals to Euro area. Talks on reforms continuing. (BBG)
— Holger Zschaepitz (@Schuldensuehner) March 30, 2015
Monday had begun full of hope for Euro exchange rate trading with the potential for great data. Eurozone industrial Confidence rose from the depths of contraction at -4.6 in February, to a much more favourable -2.9% in March.
Moreover, Economic Confidence jumped to the highest level since July 2011, reaching 103.9 in March from 102.3; economists had forecast a smaller rise to 103.0.
Meanwhile, the Pound Sterling to Euro (GBP/EUR) exchange rate was offered some support when six-month high UK Mortgage Approvals stats emerged. The ecostat leapt above and beyond forecasts to hit 61,760 in February rather than the 61,500 predicted.
Economist Howard Archer commented: ‘Housing market weakness has bottomed out, and activity is now gradually turning around.’
This comes a week after the Nationwide Housing Price ecostat showed annual property prices had dropped from 5.7% to 5.1% in March.
US Dollar Exchange Rate (USD/EUR, USD/GBP, USD/CHF) Rallies on Fed Rate Hike Speech
The US Dollar to Euro (USD/EUR) exchange rate has remained bullish after Friday saw the US Federal Reserve Chairwoman Janet Yellen announce that the central bank saw interest rates increasing this year, but reminded markets the increases would be gradual.
Yellen stated: ‘With continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year.’
‘The actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause or even reverse course depending on actual and expected developments in real activity and inflation.’
Meanwhile, the Swiss Franc to Pound Sterling (CHF/GBP) and Swiss Franc to Euro (CHF/EUR) exchange rates were bolstered by upbeat KOF Leading Indicator figures on Monday. The February ecostat was positively revised to 90.3, while the March reading rose to a healthy 90.8 rather than coming in at 89.1 as forecast.
The index has been sensitive in recent months after the Swiss National Bank (SNB) cut the tie between the Euro and the Swiss Franc (EUR/CHF) exchange rate.
KOF commented: ‘The steadying of the index reflects a slightly less pessimistic outlook than in February, with sentiment on consumer spending, industry output and exports improving.’
Euro (EUR) Exchange Rate Forecast: EUR/GBP, EUR/USD, EUR/CHF
Yet to come in Monday’s trading is Germany’s highly influential Consumer Price Index (CPI) which will detail the level of inflation in the currency bloc’s largest nation. The ecostat is expected to climb from 0.1% to 0.3% in March on the year and could warrant a Euro exchange rate rally if correct.
The US Dollar is likely to fluctuate dramatically in Monday’s American session with the release of US Personal Consumption Expenditure and US Pending Home Sales ecostats.
Personal Consumption Expenditure is forecast to remain at 1.3% on the year in February. However, if a more favourable figure emerges the US Dollar could rally significantly.
The Euro to US Dollar (EUR/USD) exchange rate is reaching 1.0855. The Euro to Swiss Franc (EUR/CHF) exchange rate is trending in the region of 1.0458; the Euro to Pound Sterling (EUR/GBP) exchange rate is trading at 0.7322.
