Pound Sterling to Euro Exchange Rate - GBP/EUR Trades Sideways; Geopolitical Tensions Affect Euro

August 25, 2014 - Written by David Woodsmith

STORY LINK Pound Sterling to Euro Exchange Rate - GBP/EUR Trades Sideways; Geopolitical Tensions Affect Euro

The Pound to Euro had a fairly turbulent time on the exchange rate markets last week, with ups and downs affected by data publications and developments in geopolitical tensions.

Friday saw a rise for the GBP/EUR in anticipation of the Jackson Hole conference that bank leaders spoke at.

The Eurozone recovery however has been hindered as a consequence of the unrest in Russia and Ukraine, and the consequent import bans placed on EU produce making its way into Russia.

The Pound Sterling (GBP) has experienced a difficult week of fluctuation, ending at a low point, following the release of more negative UK figures.

On Monday, the single currency sees a mixed situation within the forex markets:

- The Euro to Australian Dollar exchange rate is 0.04 per cent higher at 1.42000 EUR/AUD.
- The Euro to Canadian Dollar exchange rate is 0.05 per cent higher at 1.44832 EUR/CAD.
- The Euro to Pound Sterling exchange rate is trading 0.21 per cen lower at 0.79580 EUR/GBP.
- The Euro to New Zealand Dollar exchange rate is trading 0.14 pct up at 1.58177 EUR/NZD.
- The Euro to US Dollar exchange rate is trading down 0.01 per cent at 1.31964 EUR/USD.

Should you wish to send money to or from the UK/Europe, please remember the rates listed above don't factor in the margins applied by currency brokers.

Pound to Euro Exchange Rate Altered by Poor Confidence Amid Unrest

The Euro has been trading tentatively in the latter few weeks amid geopolitical tensions which have affected exchange rates between currency pairings. This week saw Augusts’ Eurozone Consumer Confidence figures drop lower than expected to -10.0, bypassing forecasts of a dip to -9.1. However, this decline has been speculated to be in relation to Eurozone sentiment dropping in light of escalating tensions between Russia and Ukraine. Economist James Shrugg commented: ‘Confidence has been undermined by the Ukraine situation as Italy reported a recession and the French economy stalled. That may have offset positives such as faster growth in Spain.’

Friday saw a Russian aid convoy ‘invade’ Ukraine, with claims that more than over 100 vehicles had crossed the border without checks at customs. Ukrainian President Poroshenko stated: ‘ column of more than 100 vehicles entered Ukranian territory without a customs inspection, without border control or International Red Cross escort, which is a flagrant violation of international law.’ The possibility of escalation in this situation remains high as Ukraine may not recognise the lorries as part of a humanitarian mission. BBC News Representative Daniel Sandford stated: ‘The Russian foreign ministry has already sent a clear warning that if the convoy is attacked, Moscow may take action. Ukraine fears that the aid convoy of at least 260 lorries, which arrived at the border more than a week ago is part of a broader Russian intervention in eastern Ukraine.’

The catalyst for the tensions between the EU and Russia came by way of the downing of flight MH17, a Malaysian Airlines passenger plane, which caused sanctions to be placed against Russia by the EU and US. The sanctions have turned into somewhat of a trade war that has seen Russia ban imports from the EU, which has affected the Eurozone’s sentiment. Any further escalation in this situation could affect exchange rates in the currency market as investors’ sentiment becomes shaken. Economist Timo del Carpio stated: ‘Geopolitical developments around the world may well delay or depress household spending decisions. Looking forward, however, the conditions necessary for a rebound in sentiment in the second half of the year are falling into place.’

Forecast for the Euro and the Pound Relies on Eurozone Data

Next week will see the only measure of the UK economic health on Friday through the UK Consumer Confidence Survey publication, meaning that the Eurozone’s data releases will prove influential for the EUR/GBP exchange rate; as will the developments within Russia and Ukraine. The Eurozone will see the release of German Business Climate figures, alongside German Current Assessment and German Expectations on Monday; whilst Thursday will see the highly influential German Unemployment Change and Unemployment Rate.

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TAGS: Euro Forecasts Euro Pound Forecasts Pound Euro Forecasts Pound Sterling Forecasts