Euro Exchange Rate Forecast: GBP EUR Could Rise on Eurozone Debt Crisis Talks

July 1, 2013 - Written by Minesh Chaudhari

STORY LINK Euro Exchange Rate Forecast: GBP EUR Could Rise on Eurozone Debt Crisis Talks

All has been relatively quiet on the eurozone debt crisis front since Cyprus managed to agree a painful bailout deal with the EU/IMF/ECB ‘Troika’ during the early part of this year; however if market whispers are to believed, all that may be about to change.

Last week’s session saw the perennial thorn in eurozone policymakers’ side – Greece – rear its ugly head once again when German Finance Minister Wolfgang Shaeuble was forced to answer prickly questions regarding the Hellenic state’s fiscal position. With Germany’s general election due in the early Autumn and a large tranche of the nation’s electorate remaining vehemently opposed to more German bailout funding being shunted Greece’s way, Shaeuble had to tread very carefully when answering questions at a news conference regarding the 2014 German budget. When backed into a corner by his interrogators, Shaeuble stated that another haircut for Greek bondholders, similar to the one which took place in 2011, was not on the cards, stating that ‘we will not do another haircut like this’. Shaeuble’s choice of words was perhaps unfortunate, leaving more cynical analysts to question, ‘what will the next Greek haircut be like, then?’.

The Euro has held up surprisingly well in spite of the ongoing conjecture regarding the Greek situation, with the Pound to Euro exchange rate (currency : GBP EUR) ending last week’s session firmly lodged in the 1.1600s. However, if the eurozone debt crisis talk builds up a head of steam, then expect the pair to make a renewed run at the 1.2000 level sooner rather than later.

The commodity Dollars endured a far less convincing finish to last week’s session, causing them to give up a fair portion of the gains which they had clawed back against Sterling during the first four days of the week. The move against the Aussie, Kiwi and Canadian Dollars was triggered by a return of ‘risk off’ trading on Friday. This saw the Pound to Australian Dollar exchange rate (currency : GBP AUD) and the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) end the week back above the 1.6600 and 1.9600 thresholds respectively.

Current exchange rates mentioned in this article are as follows: Pound to Euro exchange rate: 1.16634 GBP/EUR (-0.24%), Pound to Dollar exchange rate: 1.52126 GBP/USD (+0.03%), Pound to Australian Dollar exchange rate: 1.65970 GBP/AUD (-0.24%), Pound to New Zealand Dollar: 1.96254 GBP/NZD (-0.03%) and Pound to Canadian Dollar exchange rate: 1.60060 GBP/CAD (+0.02%)

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