The Pound Sterling to Euro (GBP/EUR) exchange rate was trending within a limited range on Thursday morning.
After having strengthened considerably on Wednesday after minutes from the Bank of England’s (BoE) most recent policy meeting printed hawkishly, the Pound levelled off somewhat on Thursday. Volatility will be fractional ahead of British retail sales data due for publication later on Thursday morning.
The Euro, meanwhile, regained some of Wednesday’s losses after Greek woes were thought to have been priced-in already. The gains have been halted, however, after German Services, Manufacturing and Composite PMIs all failed to meet with median market forecast figures.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4008.
Yesterday…
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.19% on Wednesday morning.
Although all nine policymakers from the Bank of England (BoE) were unanimous in their decision to hold the benchmark interest rate during the most recent policy meeting, the minutes were generally upbeat. This saw the Pound strengthen versus many of its most traded currency rivals.
The Euro, meanwhile, edged lower versus most of its major peers as the situation in Greece continues to weigh on investor confidence. The declination has been fractional, however, given that Tuesday’s declines were pretty severe.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3928.
Pound Sterling (GBP) Exchange Rate Advances despite Political Unease
Minutes from the most recent BoE policy meeting printed relatively positively on Wednesday which initiated a Sterling uptrend. The minutes showed policymakers were pleased with the economic progress in the Eurozone, and feel inflation will return to upwards momentum.
According to the minutes: ‘There was a range of views over the most likely future path of bank rate, but all members agreed that it was more likely than not that bank rate would rise over the three-year forecast period.’
The uptrend has been somewhat sluggish, however, with investor confidence rocky ahead of the general election. With opinion polls producing varied results, and none giving a clear majority, political uncertainty is weighing heavily on demand for the British asset.
The Pound Sterling to Euro (GBP/EUR) exchange rate has fallen to a low of 1.3873 today.
Euro (EUR) Exchange Rate Softens on Geopolitics
After Athens was forced to collect spare cash from local governments in order to pay wages and stay afloat, speculation mounted that Greece would default on the next payment due to the International Monetary Fund (IMF). Unless they can produce reforms acceptable to Eurozone officials, the likelihood of receiving financial aid is very slim indeed.
With little known as to the full extent of the ramifications of a Greek exit from the Eurozone, traders are showing increased reluctance to invest in the common currency. If Greece leaves the Eurozone ‘you get very dangerous instability,’ Jeroen Dijsselbloem, the Dutch finance minister and leader of the Eurogroup told the broadcaster RTL. ‘It’s in the interests of Greece and the Eurozone as a whole to avoid that.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains
Although Eurozone Consumer Confidence data is due for publication later on Wednesday afternoon, it is unlikely to have much impact with geopolitics dominating trade. Therefore, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.
Thursday will be very significant for the GBP/EUR pairing. German and Eurozone Manufacturing, Services and Composite PMIs will give a good indication as to the state of the Eurozone economic recovery. In addition, British retail sales data will be of interest to those invested in the Pound.
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to a high of 1.3940 today.
