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Euro to Pound Sterling Exchange Rate Weekly Roundup: May 18 to May 22

May 26, 2015 - Written by Frank Davies

Euro to Pound Sterling Weekly Roundup: May 18 to May 22



At the start of the week, the Euro firmed against the Pound Sterling as a monthly report released by Germany’s Bundesbank painted an optimistic picture of the Eurozone economy. Sentiment towards the single currency remained jittery however, as the market continued to focus on the situation in Greece. Two documents published over the weekend showed that Athens’ financial situation is increasingly fraught, and time to reach a deal with its creditor’s is fast running out. One of the documents was from the International Monetary Fund (IMF) and showed that the Fund believes that Greece will default unless it receives financial aid. The Pound Sterling softened against the Euro as data released over the weekend showed that the average asking price for a new house in the UK fell by 0.1% on a monthly basis.

On Tuesday, the Euro initially made gains against the Pound after UK inflation turned negative on an annual basis in April. The single currency received some support from positive Eurozone balance of trade data. Gains were limited however as data showed that economic sentiment in Germany fell sharply in May. Eurozone inflation meanwhile matched economist expectations.

Midweek, the Euro weakened against most major peers as concerns over a possible Greek default continued to weigh upon sentiment. Athens must pay back €305 million to the IMF by June 5 but has warned that it does not have the funds to do so. Unless a deal is reached to release €7.2 billion worth of bailout funds, the nation will default. The Pound advanced sharply against the Euro as economists raised their bets that Greece will default on its June 5 debt repayment to the International Monetary Fund (IMF). The Bank of England also upwardly revised its economic growth forecasts for the rest of the year.

On Thursday, the Euro was weakened by the release of weaker-than-forecast economic data out of Germany. The nation’s manufacturing, services and composite PMI reports all missed expectations. The Pound Sterling surged back to 1.40 levels against the Euro UK retail sales data smashed economist forecasts.

As the week ended, the Euro remained under pressure from concerns over the Greece debt crisis but managed to regain ground against several major peers as German GDP data matched economist expectations. Data out of France also offered support as it showed that business confidence in the Eurozone’s second largest economy improved strongly in May.

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