Exchange Rate Update: Pound to EUR Trending Lower Today, GBP to USD Dips by a Cent

June 23, 2015 - Written by John Cameron

STORY LINK Exchange Rate Update: Pound to EUR Trending Lower Today, GBP to USD Dips by a Cent

Pound Sterling Hits Four-Week Best Rate Against Euro

The Pound Sterling to Euro exchange rate continued to trade in a slightly stronger position today as investors speculated on the likely outcome of today's Eurogroup meeting. The British asset previously advanced to a four-week high against its European rival as the latest set of reform proposals put forward by Greece were badly received by the public and parliament.

The GBP to EUR exchange rate was trending in the region of 1.4063

Earlier...

GBP/EUR Currency Pair Jumps 0.8%, Further Gains Forecast?

Positive Manufacturing and Services PMIs for the Eurozone’s largest economies failed to lend the Euro much support over the course of the European session as the situation in Greece remained the main driver of Pound Sterling to Euro exchange rate movement. The data did indicate that the currency bloc is on course to record growth of 0.4% in the second quarter of the year, but Markit’s chief economist implied that whether or not that pace of expansion is realised largely depends on how the situation with Greece turns out.

As summarised by Bloomberg; ‘After a day of marathon talks on Monday, European leaders gave Greek Prime Minister Alexis Tsipras’s government 48 hours to make a final effort to satisfy creditors and end a five-month standoff. Leaders from Greece’s 18 fellow Euro-zone countries agreed to step up the pace of negotiations to secure a breakthrough on Wednesday that leaders can sign off at the end of the week.’

If Greece fails to reach a workable accord with creditors within the set timeframe, the GBP/EUR pairing could jump to fresh highs.

Pound Sterling to US Dollar (GBP/USD) Exchange Rate Down Today

With the situation in Greece driving up demand for safe-haven assets, the US Dollar managed to advance on the Pound during the European session. The GBP to USD exchange rate lost over 0.6% in spite of the US publishing some less-than-fantastic economic reports.

The US Markit Manufacturing PMI printed at 53.4 in June, down from 54.0 the previous month and defying forecasts for an increase to 54.1. Meanwhile, US Durable Goods Orders declined by -1.8% in May rather than the -0.1% expected.

The Commerce Department said on Tuesday non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.4% last month. These so-called core capital goods orders slipped 0.3% in April. Manufacturing has been pressured by investment spending cuts in the energy sector in the aftermath of a more than 60% plunge in crude oil prices last year, as well as Dollar strength. The number of US oil drilling rigs has dropped to near five-year lows, prompting oilfield companies like Schlumberger and Halliburton to slash their capital expenditure budgets for this year. However, the pace of decline in oil rig counts has slowed in recent weeks as crude prices edged higher.

Even with these concerning reports reducing the odds of the Federal Reserve adjusting interest rates in the near future, the GBP/USD exchange rate still shed 0.5% over the course of trading, taking ‘Cable’ back to the 1.57 level.

FX Forecast: GBP/EUR, GBP/USD Exchange Rates to Fluctuate on German IFO Business Climate, US GDP Data

Tomorrow there are several reports with the potential to initiate GBP/EUR and GBP/USD exchange rate movement, including the German IFO Business Climate/Current Assessment and Expectations data, and the US annualised first quarter GDP.

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TAGS: Dollar Pound Forecasts Euro Forecasts Euro Pound Forecasts