Pound Sterling to Euro (GBP/EUR) Exchange Rate Rallies, Breaches 1.28
During Wednesday’s European session, the Pound Sterling to Euro (GBP/EUR) exchange rate managed to climb back above the 1.28 level as Greek election worries and the prospect of the European Central Bank (ECB) introducing further stimulus early next year pushed the Euro lower.
The common currency slipped against several of its most traded rivals as Peter Praet, chief economist of the ECB, asserted that the recent drop in oil prices could undermine consumer price expectations. Praet also hinted that altered inflation projections increase the odds of quantitative easing being introduced.
Praet stated; ‘If my assessment is that there is a need for further accommodation, and if I were willing to cut rates if that had been possible, then I should not be paralysed by the fact that the only option is to buy sovereign bonds.’
With economic reports for the UK and Eurozone lacking, and markets preparing to close for the New Year break, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to continue trending in its present range.
Earlier…
GBP/EUR Exchange Rate Trends around 1.2760
The Pound Sterling to Euro (GBP/EUR) exchange rate was hovering around the day’s opening levels as the European session progressed on Tuesday.
As the Nationwide House Price report showed that UK property price growth slowed in line with forecasts, the data had minimal impact on the Pound.
The Euro to US Dollar (EUR/USD) exchange rate continued trending in the region of a two-year low as the looming Greek election sparked concerns regarding the nation’s place in the Eurozone.
Fitch, one of the world’s top ratings agencies, added to fears by asserting that a victory for opposition party Syriza would damage the creditworthiness of Greece.
It was also stated by Press TV; ‘An opinion poll published late Monday gave the anti-bailout Syriza party a three-point lead over the conservatives, indicating the need for the formation of a coalition in the country. Syriza is a fierce opponent of Greece’s bailout deal with the International Monetary Fund (IMF) and Eurozone countries, and has vowed to reconsider the austerity measures that have caused mounting dissatisfaction in the country.’
The Eurozone’s M3 money supply figures had little impact on the Euro, despite coming in stronger than expected.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2773.
Earlier…
GBP/EUR Exchange Rate Fluctuates after Greek Election News
The Pound Sterling to Euro (GBP/EUR) exchange rate experienced modest movement as the European session continued and Greece opted to hold snap elections in January rather than support the Presidential candidate offered by Prime Minister Antonis Samaras.
The candidate in question, Stavros Dimas, secured 168 votes in the third and final ballot – short of the 180 votes required.
The development saw industry expert George Pagoulatos observe; ‘These elections will be a struggle between fear for Euro exit and anger against austerity. The government will be emphasising the risks associated with Syriza’s anti-bailout stance and Syriza will try to convince voters that it can offer a viable alternative, without endangering the country’s Euro membership.’
In the immediate aftermath of the vote, the Pound Sterling to Euro (GBP/EUR) exchange rate remained 0.1% down on the day’s opening levels. The pairing had previously slipped by almost 0.3%.
The Euro also continued trending in the region of a two-year low against the US Dollar.
In the view of forex strategist Lee Hardman; ‘The vote was an unfavorable development for the euro as it heightens political uncertainty in Greece. It increases the risk of a potential clash between the new government and international creditors going forward. It reinforces our bearish outlook.’
As highlighted by Bloomberg News Agency; ‘The prospect of early parliamentary elections has roiled financial markets in Greece as it evoked memories of the height of the financial crisis in 2012 when the country’s Euro membership was in jeopardy. The anti-austerity Syriza party led by Alexis Tsipras is ahead of Samaras’s New Democracy movement in opinion polls.’
The Pound Sterling to Euro (GBP/EUR) exchange rate prepared to close out the European session trading in the region of 1.2746.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate was holding steady at 1.2770 on Monday as the Christmas hubbub died down and markets returned to trading.
GBP/EUR Exchange Rate Trending in Narrow Range
Prior to the Christmas break, the Pound managed to retain the upper hand against the Euro in spite of an improvement in Eurozone consumer confidence and slightly disappointing UK growth data.
The common currency was feeling the pressure as investors speculated on what action the European Central Bank (ECB) will take in the New Year and the political situation in Greece became more tenuous.
Over the past couple of weeks Greek Prime Minister Antonis Samaras twice failed to secure the level of backing needed to instate his presidential candidate, Stavros Dimas.
Dimas needs to receive 180 votes in order to be successful, meaning that more than half the 300-seat chamber must be on side.
The Pound Sterling to Euro (GBP/EUR) exchange rate achieved a high of 1.2783
If today’s final attempt also goes awry, Greece could hold a snap election at either the end of January or the beginning of February.
With the third ballot due to be held at 12:00 GMT, the Euro is currently trending in a softer position against the Pound and is within touching distance of a two-year low against the US Dollar.
Demand for the Euro was also limited as Italy’s Consumer Confidence index fell from 100.5 to 99.7 in December.
Greek Politics to Provoke GBP/EUR Exchange Rate Movement
A snap election could result in Greek opposition party Syriza emerging victorious.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a low of 0.7833
Given that Syriza has very firm opinions on issues like austerity and economic policy, their being in control of the country may see a return of the ‘Grexit’ fears which plagued the Eurozone in 2012.
According to analyst Junichi Ishikawa; ‘The Greek vote should be something to watch out for as a risk factor. Improving fundamentals in the US and speculation of fresh monetary easing by the ECB could lift global stock markets further’.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast
While economic reports for the UK are in short supply today, there are several ecostats scheduled for publication in the days ahead which could cause Pound Sterling to Euro (GBP/EUR) exchange rate volatility.
UK reports to be aware of include the Nationwide House Price figures for December, Net Consumer Credit data, Mortgage Approvals numbers and the Markit Manufacturing PMI.
Of course GBP/EUR volatility could also be occasioned by manufacturing data for the Eurozone and its largest economies as well as Spanish inflation figures, Italian business confidence and Spanish Consumer confidence reports.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.2761
The Euro to Pound Sterling (EUR/GBP) exchange rate is currently trending in the region of 0.7834
