Euro to Pound Sterling Weekly Roundup May 11 -15

May 17, 2015 - Written by Ben Hughes

STORY LINK Euro to Pound Sterling Weekly Roundup May 11 -15

Euro to Pound Sterling Weekly Roundup May 11 -15

At the start of the week, the Euro was weaker against the Pound, other major peers as investors were jittery ahead of a meeting between Greece, and European Union Finance Ministers, which ended in disappointment as very little progress, was made. The Pound Sterling meanwhile was stronger against the Euro and several other major peers as the currency continued to receive support from the previous weeks surprise general election result. Prime Minister David Cameron’s announcement that Scotland will not be given another independence referendum eased market fears over a breakup of the UK. The Bank of England left interest rates unchanged at 0.5% and its monthly quantitative easing programme at £375 billion.

On Tuesday, the Euro made gains against its major peers after Greece successfully repaid €750 million to the International Monetary Fund (IMF). The payment eased some of the concerns that the nation would default. Despite the repayment, Greek Finance Minister Yanis Varoufakis warned that the nation’s financial situation is now ‘terribly urgent’. The Pound Sterling weakened as Prime Minister David Cameron suggested that a promised EU referendum could be brought forward to 2016. As the session progressed, the Pound clawed back lost ground as industrial and manufacturing production data came in positively and eased fears that the UK is slowing.

Midweek, the Euro experienced mixed trading. In the morning, it pushed higher as it was supported by increases in Eurozone bond yields and upbeat Eurozone data. The French economy expanded far more than expected in the first quarter of 2015. The German economy expanded at a slower rate than forecast but any disappointment from that report was countered by stronger-than-forecast inflation data. The Euro then softened as Eurozone GDP growth figures missed expectations and industrial production across the currency bloc fell unexpectedly.
The Pound too was mixed on Wednesday as UK unemployment and average earnings data beat forecasts. As the session progressed, it softened as the Bank of England cut its UK growth forecasts for the next three years.

On Thursday, the Euro advanced against most of its major peers as it was boosted by a surge in German and US bund yields that rose to the highest level in five months. German bund yields act as benchmarks for European financial markets and higher yields push the Euro higher against its peers. The Pound Sterling softened against the Euro as it came under pressure from the Bank of England’s announcement that it has cut its economic growth forecasts for the next three years.

On Friday, the Euro softened, as investor attention will now focus on Greece, worries over the nation’s economy increased on news that Athens was planning to sell-off the country’s largest port to the Chinese to raise some much-needed funds. The Pound made gains as construction output data beat expectations.

Next week the EUR/GBP exchange rate is expected to experience volatility, as focus will turn to Greece.

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