The Euro to Pound Sterling (EUR/GBP) exchange rate strengthened by around 0.20% on Thursday morning.
With the European Central Bank (ECB) launching quantitative easing at the same time as renewed anxieties regarding a potential Grexit amplified, it is unsurprising that the common currency depreciated significantly. However, Thursday morning has seen the shared currency recover a fraction of its losses amid fears of overdone declination. The Euro is likely to resume trending lower in the long-term, however, with so many downward pressures seeing stuttered demand.
The Pound, meanwhile, softened as a result of a stronger single currency. The losses are unlikely to be significant, however, thanks to positive housing data and reassurances from the Bank of England (BoE) that deflation would not affect monetary policy decisions.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7082.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate plummeted by around -1.00% on Wednesday morning.
Although British economic data produced a mixed-bag of results on Wednesday morning, the Pound strengthened versus most of its major peers. The appreciation can be attributed to increasingly positive sentiment towards the Bank of England (BoE) after Governor Mark Carney stated that using stimulus to combat low oil prices was foolish.
The Euro, meanwhile, softened across the board as ongoing tensions in Greece sees the country on a knife edge. With financial aid forestalled until Greece accepts the conditions of austerity, the nation has tapped into its bank rescue fund.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7028.
Euro (EUR) Exchange Rate Struggles against Geopolitics
Having allowed the troika to enter Athens, many speculated that Greece would be given crucial financial aid. However, this has not been the case after Greek officials once again provoked the anger of Germany after demanding compensation for World War Two losses.
‘After the reunification of Germany in 1990, the legal and political conditions were created for this issue to be solved. But since then, German governments chose silence, legal tricks and delay,’ Prime Minister Alexis Tsipras told a parliamentary debate. ‘And I wonder, because there is a lot of talk at the European level these days about moral issues: is this stance moral?’ he added.
With nowhere else to turn, Greece has been forced to tap into Eurozone rescue funds set aside for bailing out banks. ‘This is money for which there is no other claim, it is available for the government,’ a senior banker with direct knowledge of the matter told Reuters.
‘The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue,’ the banker added. He also said it was up to the government to decide when it withdraws the cash.
The Euro to Pound Sterling (EUR/GBP) exchange rate has fallen to a low of 0.7019 today.
Pound Sterling (GBP) Exchange Rate Strengthens despite Slowing Factory Output
British economic data produced mixed results on Wednesday, although the data had minimal impact on the Pound. Yearly Industrial Production met with the median market forecast of 1.3% growth in January. However, Manufacturing Production only registered output growth of 1.9% in January on the year, failing to meet with the market consensus of a growth of 2.6%.
‘British industrial output expectedly fell in January hit by a reduction in work in the information technology and machinery sectors after a strong December,’ stated William Schomberg, writing for Reuters.
However, after BoE Governor Mark Carney stated that there was no way the bank would use stimulus to combat low oil prices, positive sentiment towards the institution saw heightened demand for the British asset.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Trend Lower
With little by way of positive news coming out of Europe, and with increasing positive feelings towards the BoE, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to continue trending lower over the course of Wednesday’s trade. There is the possibility for Sterling volatility later on Wednesday morning, however, with the publication of UK growth estimate data.
The Euro to Pound Sterling (EUR/GBP) exchange rate advanced to a high of 0.7106 today.
