The Euro to Pound Sterling (EUR/GBP) exchange rate was trending within a narrow range on Friday morning.
After reassurances from Greece’s Prime Minister, Alexis Tsipras that Athens will continue with the bailout program in spite of the spat with Germany, the shared currency recovered losses versus the majority of its most traded rivals.
In contrast, the Pound cooled versus most of its major peers in response to dovish words from Bank of England (BoE) Governor Mark Carney, who stated that rate increases would be incremental and gradual over the next three years.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7135.
Yesterday…
The Euro to Pound Sterling (EUR/GBP) exchange rate is trending within a tight range on Thursday morning.
After having declined significantly amid tensions in Greece and with the launch of quantitative easing in the Eurozone, the shared currency recovered some of its losses on Thursday morning as a result of speculation that the declination was overdone. With the relationship between Germany and Greece fractious at best, there is a high likelihood that the Euro will continue to trend lower in the long-term.
The Pound, meanwhile, strengthened versus some of its major peers thanks to positive results from domestic data. The appreciation has been somewhat minimal, however, thanks to the stronger single currency.
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7070.
Euro (EUR) Exchange Rate Ticks Higher on Overdone Devaluation
As explained above, the recent Euro slide is seen as overdone which caused the common currency to rebound a little. However, with so many factors causing downwards pressure the recovery is unlikely to be sustained.
‘The speed of the Euro’s move suggests that it may be looking oversold in the short term,’ said Mitul Kotecha, of Barclays Plc. ‘But directionally, it’s still moving lower.’
European economic data also aided the single currency uptrend. Of particular significance was Eurozone Industrial Production which showed growth of 1.2% on the year in January, well above the median market forecast growth of 0.1%.
The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7034 today.
Pound Sterling (GBP) Exchange Rate Fluctuates despite Positive Data
The Pound fluctuated versus its major peers on Thursday despite positive domestic data. The fluctuations can be attributed to changes in foreign currency movement rather than as a result of domestic shortcomings. The stronger single currency is also weighing on the British Pound.
RICS House Price Balance advanced by 14% in February, eclipsing the market consensus of an increase of 6%. ‘It is encouraging that the negative trend in buyer enquiries appears to be dissipating, perhaps in part because of growing confidence that the cost of borrowing will stay lower for longer,’ said Simon Rubinsohn, RICS chief economist.
In addition, the UK’s Trade Deficit narrowed from £-2.89 billion to £-0.616 billion in January.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Soften
Given the various downward pressures weighing on the common currency, and with positive British data supporting speculation of a sooner-than-expected benchmark rate hike, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to soften over the course of Thursday’s trade.
Friday could see a slight EUR/GBP recovery because the UK’s construction output data is forecast to cool.
The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7092 today.
