The Pound Sterling exchange rate strengthened to a 7-year high against the Euro, a 3-day high against the US Dollar and surged against the Canadian Dollar and South African Rand as concerns over Greece weigh on market sentiment.
The GBP/EUR exchange rate hit a session high of 1.353
The Euro fell against most of its major peers as market attention turns to the emergency meeting of European finance ministers due to be held later in the day. Greece’s new Prime Minister Alexis Tsipras easily won a vote of confidence on Tuesday evening and set the stage for a conflict with other European leaders.
Tsipras reaffirmed his pledge to reject an extension to the country’s bailout. Fears are growing that Greece will go bust when its current batch of bailout funds run out at the end of this month. Greece is seeking a loan to cover its costs until September but Germany and other EU members are expected to refuse such a deal.
‘It is hard to be anything other than pessimistic about the outcome of what is unfolding in Europe, with respect to Greece and its negotiations with its creditors, as the negotiations continue to resemble a form of Mexican stand-off, or a game of Russian roulette,’ said the chief market analyst at CMC Markets.
The GBP/USD exchange rate hit a session high of 1.530
Against the US Dollar, the Pound Sterling advanced to its best level in 3 days as it continued to receive support from positive UK data released earlier in the week.
The ‘Greenback’ however had seen the support from last week’s strong jobs data wane and a lack of data releases was not offering support.
The GBP/CAD exchange rate hit a session high of 1.933
The Canadian Dollar fell against the Pound and other major peers as a Bank of Canada official highlighted weaknesses in the Canadian economy. Senior deputy governor Carolyn Wilkins said the Bank of Canada cut its benchmark rate by 25 basis points in January to help navigate the economic uncertainty tied to low oil prices. Investors now believe that another rate cut is on the cards. Weak oil prices and a lack of risk appetite also weighed on the currency.
The GBP/ZAR exchange rate hit a session high of 18.107
The South African Rand weakened against the Pound due to the lack of demand for riskier assets ahead of the European finance ministers meeting. Concerns over power cuts were also weighing on sentiment towards the Rand.
