Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Edge Higher despite Better-than-Expected UK Services Growth

July 3, 2015 - Written by John Cameron

STORY LINK Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Edge Higher despite Better-than-Expected UK Services Growth

Euro (EUR) Exchange Rate Forecast to Tick Higher against the Pound (GBP) Amid Greek Debt Relief Optimism

The Euro to Pound Sterling (EUR/GBP) exchange rate edged higher by around 0.115 on Friday afternoon.

Over the past few days the shared currency strengthened versus its major peers. The appreciation can be linked to optimism that Eurozone officials will do everything in their power to keep Greece as one of the 19 members of the currency bloc. Hopes for a resolution after the austerity referendum were solidified on Friday after the International Monetary Fund (IMF) conceded that Greece would have to have some debt relieved in order to sustain economic recovery. The timing of this realisation is likely to give a healthy boost to the ‘yes’ campaign wishing to accept austerity measures in return for bailout funds.

Greek Prime Minister Alexis Tsipras will still campaign for the no vote despite the new insight from the IMF. This is because a ‘yes’ to austerity would somewhat compromise electoral ethics given his parties left-leaning policies. In response to the IMF’s report, Tsipras said; ‘Yesterday an event of major political importance happened. The IMF published a report on Greece’s economy, which is a great vindication for the Greek government as it confirms the obvious – that Greek debt is not sustainable.’

The Euro to Pound Sterling (EUR/GBP) exchange rate dropped to a low of 0.7093 today.

Pound Sterling (GBP) Exchange Rate Forecast to Edge Lower against the Common Currency (EUR) Even after Composite PMI Betters Estimates

British economic data produced positive results on Friday which saw the Pound gain versus many of its currency competitors. The Markit/CIPS Services PMI came in at 58.5 in June; eclipsing the median market forecast increase from 56.5 to 57.5. The combination of services and construction growth saw June’s Composite PMI gain beyond expectations despite a slight drag from stunted manufacturing output.

Commenting on the Services PMI, David Noble, Group Chief Executive Officer at the Chartered Institute of Procurement & Supply said; ‘The service sector continued on its robust growth path with an accelerated expansion in activity. The latest rise was stronger than the survey average, supported by further growth of new work and new staff.’

Euro to Pound Sterling (EUR/GBP) Exchange Rate Forecast to Fluctuate ahead of Austerity Referendum

Given that so much rests on the outcome of Sunday’s Greek austerity referendum, the Euro to Pound Sterling (EUR/GBP) exchange rate is likely to fluctuate. It is reasonable to predict a Euro declination, however, as uncertainties weigh heavily on investor confidence. No matter the outcome of the referendum, expect EUR/GBP volatility.

The Euro to Pound Sterling (EUR/GBP) exchange rate climbed to a high of 0.7120 during Friday’s European session.

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TAGS: Euro Forecasts Euro Pound Forecasts Pound Sterling Forecasts