GBP/EUR Exchange Rate Trending Up as Draghi Makes Dovish Comments to EU Parliament
In a speech to lawmakers from the European Parliament, European Central Bank (ECB) President Mario Draghi today suggested that the Eurozone economy needed additional help in order to push up the rate of inflation. His words tied in with previous comments that the ECB would intervene if inflation risked falling short of the 2% target within two years.
The Pound Sterling is trading up with a high of 1.4203. It has been held back slightly by warnings from the Royal Institute of Chartered Surveyors (RICS) regarding a potential housing bubble, with homes predicted to become increasingly unaffordable over the next 5 years.
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The GBP/EUR exchange rate is currently volatile in the face of political uncertainty in the Eurozone and mixed UK unemployment data.
GBP/EUR Continues to Trend Narrowly with the Release of Mixed UK Employment Data
UK employment data has been decidedly mixed today but provided Pound Sterling with a little strength as the Euro suffered thanks to Eurozone problems. While the 3-month Unemployment Rate fell to a seven-year low of 5.3%, with quarterly Employment Change posting a better-than-forecast 177k, Average Weekly Earnings increases failed to rise above 3.0% and the Jobless Claims Change far exceeded the expected 1.4k, posting at 3.3k.
The mixed data has seen the Pound Sterling make minor gains against all currencies other than the Turkish Lira (TRY). A small fall in unemployment is a positive sign for the UK economy, although wage increases remaining static leaves plenty of uncertainty over what stand the Monetary Policy Committee (MPC) will take regarding interest rates in December. Chief UK economist at Capital Economics, Vicky Redwood, believes that the data shows ‘[a] fairly solid labour market, but not one strong enough to warrant an interest rate rise soon.’
The GBP/EUR exchange rate is experiencing movement of around 0.35%.
Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast: Common Currency to be Further Weakened by Greece and Portugal
Creditors are currently withholding the next €2 billion tranche of Greece’s bailout because of disputes over how the Greek government has implemented the necessary measures. Eurozone finance ministers are pushing for more to be done to grant Greek lenders additional powers to repossess homes, while Prime Minister Alexis Tsipras wants to ensure first time homeowners are protected from foreclosure.
Delays in this bailout payment could have a knock-on effect, setting back the delivery of €10 billion set aside to replenish the cash reserves of Greek banks. ‘We’re optimistic, we’ve come closer on several issues, but we’re still committed to protecting primary residences,’ claimed one anonymous official, speaking to the New York Times.
Uncertainty in the markets has grown further following the news that Portugal’s centre-right government collapsed after just 11 days in power when the country’s parliament held a vote of no confidence in the minority government. An anti-austerity left-wing coalition could take power, setting Portugal on course to clash with the rest of the Eurozone and risk becoming ‘another Greece’.
The EUR/GBP exchange rate is currently trending in the region of 0.7067 to 0.7104.
GBP/EUR Exchange Rate Predicted to Continue Uptrend Ahead of German Consumer Price Index
The GBP/EUR exchange rate is likely to continue upwards, buoyed by some positive UK employment data. News from Greece and Portugal will keep the Euro down until agreements can be reached. The German Consumer Price Index data, released tomorrow, is forecast to rise by the same levels as previously, which could provide a point of certainty in a cautious market.
GBP/EUR is currently experiencing a sharp rise from a daily low of 1.4080 to trend around 1.4143.
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