The Pound Sterling to Euro (GBP/EUR) exchange rate has dipped today ahead of the likely approval of the Greek bailout tonight.
ESM ‘Yes’ may send Common Currency Soaring against the Pound
The Pound Sterling (GBP) has continued to perform poorly against the Euro (GBP/EUR) today, and this disadvantage seems set to increase as the day continues. Although the Greek bailout package passed through the Bundestag successfully, there were a significant number of votes against the measure, and the Dutch parliament’s current reaction to the situation is not encouraging for the Euro’s (EUR) future prospects. Although a Dutch vote is not required over the Greek bailout plan, debates are currently raging over Prime Minister Mark Rutte’s support of the deal. Former member of the majority People’s Party for Freedom and Democracy (VVD) Geert Wilders was particularly caustic, claiming ‘The Greeks are lying. Every time Prime Minister Rutte believes the promises of this European junkie, Greece’.
In order to secure the deal and trigger a likely boost in the Euro’s performance, the Greek bailout deal only now needs to be approved by the European Stability Mechanism (ESM) tonight.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate has dropped today, as confidence in the Euro (EUR) appears to have been widely restored this morning.
GBP/EUR Drops off as Yesterday’s High Fades Away
The Pound Sterling (GBP) has fallen by -0.1% against the Euro (GBP/EUR) today, and has levelled out against all of its other rivals. The Pound’s decline in performance today reflects a more sober reaction to yesterday’s news that the UK inflation rate increased by 0.1% annually in July. Although this was against predictions, and certainly supportive of the UK economy, it was also not a guarantee that the UK interest rate would rise in the near-future, if even in this year.
The Euro’s (EUR) performance has been satisfactory today, although any major developments in the Bundestag later on are sure to have an impact on its gains or losses.
Earlier…
The Pound Sterling to Euro (GBP/EUR) exchange rate shot up today after an unpredicted increase in the UK inflation rate inspired a tidal wave of confidence in the Pound (GBP).
GBP/EUR Exchange Rate Elevated after UK Inflation Rate Defies Expectations
The Pound Sterling (GBP) has made sweeping gains against all of its rivals today, which includes a 0.9% gain against the Euro (GBP/EUR). This comes as the UK annual CPI result for July revealed that the UK inflation rate had risen to 0.1%. Although this was a very minor increase on the previous reading of 0.0%, the result went against predictions; most forecasts had been for stagnation, while more pessimistic speculations were for deflation to occur. As it happened, the 0.1% increase triggered a mass upsurge in the Pound’s performance because the rising UK inflation rate has now been loosely tied to a higher chance of the UK interest rate increasing for some time. This sentiment was supported by a recent article published by Bank of England (BoE) Monetary Policy Committee (MPC) member Kristin Forbes.
The Pound has risen across the board today with its greatest gains being of more than 1% against the Australian Dollar (GBP/AUD), the Norwegian Krone (GBP/NOK), the Russian Ruble (GBP/RUB) and the Turkish Lira (GBP/TRY).
All Eyes on Germany as Greek Bailout Faces European Parliament Votes
The Euro (EUR), by stark contrast to the Pound (GBP), has fallen overall, with the only major gain being a 0.3% rise against the Australian Dollar (EUR/AUD). Elsewhere, the common currency has dropped against the Pound (EUR/GBP) by -0.9% and by -0.3% against the Indian Rupee (EUR/INR) and the Japanese Yen (EUR/JPY).
The performance of the Euro is currently balanced by events surrounding Greece; while the third bailout package was approved by the Greek parliament and Eurozone finance ministers on Friday, the deal still has to be approved by several European parliaments this week. Most participating countries are expected to approve the measure, but German MPs remain a wildcard in the proceedings. German Chancellor Angela Merkel has supported the proposal, but many of her own party have objected to the terms of the bailout, particularly the possibility of providing debt relief to Greece and granting bridging loans so that the county can meet its most pressing repayment deadlines.
Pound Sterling Expected to Hold Advantage in GBP/EUR Pairing and against USD, AUD
The Pound (GBP) is expected to retain its advantage against the Euro (GBP/EUR) for the rest of today and may even expand its gains further as the day progresses. The most immediate factor that could shift the current trend is the Bundestag voting, which begins tomorrow at 8am. If Germany approves the deal, the Euro (EUR) may bounce back against the Pound (EUR/GBP), although given the sheer range of gains that the Pound has experienced today, such a victory for the Euro may not be enough.
Current GBP, EUR Exchange Rates
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4196 and the Euro to Pound Sterling (EUR/GBP) exchange rate was trending in the region of 0.7044 today.
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