Forex Forecast: Pound Sterling Euro (GBP/EUR) Exchange Rate Advances Today on Expectations of Greek Debt Demise

June 16, 2015 - Written by John Cameron

STORY LINK Forex Forecast: Pound Sterling Euro (GBP/EUR) Exchange Rate Advances Today on Expectations of Greek Debt Demise

GBP to EUR Exchange Rate Pares Gains before UK Employment Stats

The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to 1.39 on Tuesday in response to the news that the UK emerged from deflation. However, the pairing trimmed these gains prior to the publication of the UK's latest employment figures. Sterling is likely to rally if the data meets estimates, but if average earnings aren't shown to have increased as expected the Pound could falter. Dovish meeting minutes from the BoE would also weigh heavily on Sterling.

Earlier...

Pound Sterling to Euro (GBP/EUR) Exchange Rate Holds at 1.38 Today as Greek Negotiations Falter

Greek bond yields jumped and Eurozone share markets slumped during yesterday’s session as the mood in Brussels and Athens deteriorated.

Investors were already jittery following last Thursday’s walk-out by the International Monetary Fund’s negotiating team after 45mins of debt discussions with the Athens delegation and nervousness threatened to break into all-out panic yesterday morning when details of yesterday’s rejected debt proposals from Greece’s left-wing leadership emerged in a Greek daily newspaper. The Greek contingent’s offer appeared to cock a snook at the eurogroup, containing details of a proposed cut to sales tax on medicine, books and theatre tickets, while offering only €71m of pension cuts for next financial year.

Euro (EUR) to Pound (GBP), Australian Dollar (AUD), US Dollar (USD) Exchange Rate Fluctuates as European Stocks Fall

The eurogroup’s official Spokeswoman Annika Breidthardt took a dim view of proceedings, commenting that, 'the (eurozone) proposals meet the needs of the Greek people, the Greek government, but also of the other 18 (euro zone) member states..... the targets have already been significantly lowered... It’s not a one-way street.’

However, the sharp downward movement in European stocks was by no means mirrored by movement for the euro (currency:EUR) on the day. By the start of the North American trading session, the Pound Sterling euro exchange rate was still loitering several cents below its near-term high of 1.4258 and was virtually unchanged since the global currency markets re-opened for business on Sunday night at just above the 1.3800 threshold. The currency market is the most liquid of all global markets, with over $5tn exchanged each working day, so most analysts consider it to be closer to a ‘perfect market’ than its equities counterpart.

EUR/GBP Exchange Rate Forecast to Rebound at the End of June?

The price action on the day lent credence to analysts from Salman Ahmed of Lombard Odier; he stated that; ‘the Greek banking sector is now totally dependent on the ELA provided by the ECB, which gives the European authorities a very strong bargaining chip as any reduction of this support will very quickly push Greece towards capital controls and extended bank holidays, which in turn will make the ruling Greek government very unpopular. We expect noise on the Greek front to continue over the short-term (or even escalate), but expect a deal of some form to happen before the end of the month, given how damaging the alternative is for both sides.’

Many economists agree and forecast renewed gains for the EUR GBP exchange rate towards the latter part of this month.

Pound Sterling to Euro (GBP/EUR) exchange rate could shed recent gains towards the end of the month, pairing currently trending at 1.38

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