The Pound Sterling to Euro (GBP/EUR) exchange rate gained by around 0.35% on Friday morning.
After the conclusion of the Eurogroup meeting in Riga, the shared currency softened versus the majority of its most traded currency rivals. The declination is the result of harsh words towards Greek officials from Eurozone officials, who stated that reform needs to be a speedier process.
The Pound, meanwhile, edged higher versus many of its most traded currency competitors on Friday. This is likely to be the result of fears that Thursday’s declination was overdone. Given that political uncertainty has been priced-in to a certain extent, the poor retail sales data on Thursday didn’t warrant such heavy losses.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3959.
Pound Sterling (GBP) Exchange Rate Edges Higher despite lack of Data
Although the British economic docket is completely absent of data on Friday, the Pound advanced versus many of its major peers. As explained above, much of the appreciation can be linked to fears of an unjustified dip on Thursday, with concerns regarding the general election already priced-in.
In addition to unwarranted losses, the Pound advanced with continued positive sentiment towards the Bank of England (BoE) after minutes from the most recent Monetary Policy Committee (MPC) meeting printed hawkishly.
‘The BoE slipped in a comment that seems to indicate markets are being too relaxed about the timing of upcoming rate hikes,’ said Enrique Diaz-Alvarez, chief risk officer at Ebury. ‘The phrase ‘the path of bank rate expected by financial markets was now exceptionally flat’ is, I think, driving the positive reaction in Sterling.’
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low today of 1.3863.
Euro (EUR) Exchange Rate Softens on Greek Woes
The Eurogroup meeting in Riga today didn’t go as well as many traders had predicted, with tensions between Greek and Eurozone officials close to breaking point. Greek Finance Minister Yanis Varoufakis admitted that he had taken a ‘hammering’ from Eurogroup members.
‘Greek Finance Minister Yanis Varoufakis was heavily criticized by his Euro-area colleagues amid mounting frustration at his refusal to deliver measures to fix his country’s economy and release financial aid, according to three people familiar with the talks. Euro-area finance chiefs said Varoufakis’s handling of the talks was irresponsible and accused him of being a time-waster, a gambler and an amateur, one of the people said. Ministers are meeting in Riga, Latvia, to assess progress in negotiations over financial aid for Greece,’ stated Bloomberg.
The difficulties in Greece have once again micrified domestic data. Friday’s positive German economic data has had minimal impact amid geopolitical upheaval.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains
Given that traders have reacted poorly to the Eurogroup meeting and the following press conference, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of Friday’s European session. Although the positive German data has had minimal impact on the Euro, it is positive for the UK given that improvement in the Eurozone economic recovery is better for trade.
Sterling could make further gains on Monday if the latest data compiled by the Confederation of British Industry shows that UK business optimism has improved. A negative report will likely weigh.
As well as Wednesday’s German inflation data, the Euro will also be influenced by Eurozone confidence reports and Spanish retail sales data.
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a high of 1.3982 today.
