The Pound Sterling to Euro exchange rate was trading steadily in the region of 1.33 on Thursday as positive German data was countered by concerns over Greece’s bailout negotiations and the upcoming interest rate decision by the Bank of England (BoE).
‘Greeks haven’t been this cornered since the battle of Thermopylae’
The Euro fell against the majority of its most traded peers overnight after concerns over Greece were renewed by an announcement by the European Central Bank that it had cancelled its acceptance of Greek bonds in return for funding. The action was seen as a sort of blackmail as it isolates Greece and puts pressure on Athens to reach a new reform deal with its creditors in the Troika.
The decision came just hours after Greece’s new finance minister, Yanis Varoufakis, emerged from a meeting with ECB President Mario Draghi to say the ECB would do “whatever it takes” to support member states such as Greece.
A standoff now seems certain, as Germany is set to assert more pressure and try to force the left wing Syriza led Greek government to abandon its pre-election pledges to ease austerity measures on a population that has suffered years of hardship.
Bookmakers have cut the odds for a Greek exit from the Eurozone and are betting that Syriza will have to back down.
‘The Greeks haven’t been this cornered since the battle of Thermopylae and further pressure from the ECB could lead to Syriza backtracking on their commitment to keep Greece in the Eurozone,’ said a spokesman for Paddy Power.
Despite the concerns over the standoff, the Euro found support from data released earlier in the session, which showed that German factory orders rebounded strongly and increased by the fastest pace in five months.
Factory orders grew a seasonally and working-day adjusted 4.2% month-on-month in December, reversing a revised 2.4% fall in November, figures from Destatis showed Thursday. The latest order growth was the strongest since July, when demand rose 4.8%.
Lending more support was the report released by the European Commission. The report shows that the EC raised its growth forecasts for the year ahead.
In its forecast, the EC expects Eurozone GDP to rise by 1.3% in 2015, a rise from its previous forecast for growth of 1.1%. It expects lower oil prices will boost spending activity and aid the sluggish economy.
‘Europe’s economic outlook is a little brighter today than when we presented our last forecast. But there is still much hard work ahead to deliver jobs that remain elusive for millions of Europeans,’ said the EU’s economic chief Pierre Moscovici.
