Forex Outlook: VIX Pops, British Pound Sterling to Euro Exchange Rate Forecast Higher on Eurogroup News

July 7, 2015 - Written by John Cameron

STORY LINK Forex Outlook: VIX Pops, British Pound Sterling to Euro Exchange Rate Forecast Higher on Eurogroup News

Pound Falls against Euro, US Dollar Today, GBP/EUR Exchange Rate Softer

The Pound to Euro (GBP/EUR) exchange rate lost 0.7% today as Greece was given more time to develop a workable reform proposal. The GBP/USD exchange rate also slid by over 0.6% on the day's opening levels ahead of tomorrow's Bank of England interest rate decision.

Earlier...

GBP/EUR, GBP/USD Exchange Rate Movement Triggered by Greek Negotiations Today

The closely-watched VIX ‘Fear Index’ has spiked during this afternoon’s trading session as the mood in Brussels deteriorates. The measure of the number of protective ‘put’ orders placed by Chicagoan traders on their transactions is viewed by experts as a key gauge of the mood in the markets. As recently as the final week of last month VIX was trading in the 12.00s, but the measure has popped by over 12% to a heady 19.15 a short time ago.

The shift out of risk-laden assets has been driven by comments emerging from Brussels and the anticipation of what tonight’s emergency summit might hold. The news that Greece had failed to put forward any fresh proposals to the eurogroup during today’s meeting had spooked market participants. However, the edge was taken off this news by eurogroup leader Jeroen Dijsselbloem’s assertion of a short time ago that Greece would produce a set of proposals tomorrow. Whether this new proposal will just be a re-hash of last month’s unrealistic offering from Athens remains to be seen.

Grexit Fears Predicted to Weigh on Euro (EUR) Exchange Rate Trading this Week

The general mood amongst the euroland policymakers arriving at the summit was downbeat; Dutch Prime Minister Mark Rutte warned the assembled pressmen that Greece needed to come up with a tangible set of proposals sooner rather than later otherwise the eurozone leaders’ patience might run out.

Meanwhile, European Commission President Jean-Claude Juncker placed the ball firmly in Greece’s court, observing that a resolution to the long-running crisis ‘depends on Mr Tsipras’. The news that rebellious Greek leader Alexis Tsipras will address the European Parliament tomorrow morning hardly filled investors with optimism; if he continues to bang his anti-austerity drum in Brussels tomorrow morning, then expect currency market participants to send the Pound Sterling euro exchange rate Northwards to a fresh 7 ½ year peak above last month’s high of 1.4309.

Currency Market Outlook: FOMC Minutes to Impact USD to GBP, USD to EUR Exchange Rate Movement

Analysts forecast that tomorrow evening’s Federal Reserve minutes from its June 16th – 17th monetary policy meeting could be market moving for GBP EUR – any suggestion that US interest rates will be on their way up soon would send EUR USD exchange rate lower, further hampering the shared currency’s progress against the Pound.

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TAGS: Currency Predictions Pound Euro Forecasts Pound Sterling Forecasts