The Pound Sterling to Euro (GBP/EUR) exchange rate is trending within a tight range on Friday morning.
European data printed relatively positively on Friday, but the data had minimal impact on Euro movement as trader focus is dominated by the forthcoming Eurogroup meeting. With mounting anxieties that they will be unable to come to a unanimous resolution, the shared currency is unlikely to rack up significant gains.
The Pound Sterling, meanwhile, softened a little versus most of its major peers. This can be attributed to less-than-ideal domestic data. The declination is unlikely to be significant, however, with positive sentiment towards the Bank of England (BoE) as traders speculate the British institute will be the first major central bank to hike rates.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3575.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate is trending within a limited range on Thursday morning.
After Greek officials requested a loan extension from creditors, the Euro edged lower amid fears that the inability to repay debt will force a Grexit from the Eurozone. Mixed domestic data has done little to overshadow heightened expectation that Greece will revert to the Drachma.
Meanwhile, the Pound is holding steady thanks to heightened speculation that the Bank of England (BoE) will lead the way in a rate hike cycle. This notion was bolstered by minutes from the Federal Reserve’s latest policy meeting which highlighted policy maker caution with regards to rate revisions.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3549.
Pound Sterling (GBP) Exchange Rate Holds Gains on Dovish Fed
As described above, the Fed published a dovish set of minutes which showed policymakers to be cautious when it comes to hiking rates, fearing that external forces could upset the US economic recovery. A dovish Fed is heightening trader speculation that the Bank of England will hike rates first.
‘You can almost hear a little hesitation in the committee,’ said Zach Pandl, senior interest rate strategist at the investment firm Columbia Management. ‘They sound confident on the economy but nervous on pulling the trigger on rate hikes.’
‘Many participants indicated that their assessment of the balance of risks associated with the timing of the beginning of policy normalization had inclined them toward keeping the federal funds rate at its effective lower bound for a longer time,’ the minutes said.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3495 today.
Euro (EUR) Exchange Rate Holding Steady despite Grexit Concern
Although the situation in Greece appears to be no nearer to resolution, the Euro managed to avoid a significant declination on Thursday. This is most likely to be as a result of the large single currency depreciation on Wednesday. However, with the potential for a Greek exit from the Eurozone ever present, positive sentiment towards the common currency is in short supply.
‘Going to the Drachma is the only possibility I believe, because then the economy will be revitalized rather quickly,’ Hans-Werner Sinn, the widely-respected economist, told CNBC Thursday. ‘We have to accept that as creditors and face the truth and reduce the burden to the Greek people,’ he added.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Gain
As traders await British trends data, and with pressure from a lack of resolution between Greece and the Eurogroup weighing on demand for the shared currency, the Pound Sterling to Euro (GBP/EUR) exchange rate has the potential to gain.
With that being said, the European Central Bank (ECB) minutes and Eurozone Consumer Confidence data are likely to cause volatility. If the consumer confidence data improves the Euro is likely to recover more of Wednesday’s losses.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high today of 1.3562.
