Eurozone Summit Could Send Pound to Euro Exchange Rate Higher

Modified: Thursday, 27 June 2013 09:48 BST - Written by John Cameron

STORY LINK Eurozone Summit Could Send Pound to Euro Exchange Rate Higher

The early part of last year was peppered with eurozone summit after eurozone summit as the seventeen nation bloc attempted to resolve its burgeoning debt crisis. As each successive summit passed without any resolution to the potentially catastrophic situation, the euro lost more ground, sligshotting the Pound to euro exchange rate to within spitting distance of the 1.3000 threshold just under a year ago. And then the trail went cold. A bolstered bail-out fund saw fears regarding a collapse of the single currency recede and the summits died out. The euro recovered.

However, the main event in the global currency markets today is a eurozone heads of state summit in Brussels. The region’s sovereign debt crisis will be, for the most part, off tjhe agenda today, replaced instead by a long-running argument regarding the make-up of the single economic area’s budget for the next few years. There have been months of unfruitful compromise talks between the region’s nations, with each nation state forcefully arguing for its own agenda to be adopted for the whole.

The simmering situation has caused ill-feeling to re-emerge between Germany and her Southern European partners, whilst the UK has forcefully argued for a reduction in her annual contribution to the European Union purse. There appears to be a real chance that the summit will dissolve into an unholy row between Europe’s leading nations – if such an event comes to pass, then expect the GBP EUR exchange rate to spiral towards the 1.2000 level in double-quick time.

Elsewhere, the finalised version of the UK’s Q1 GDP growth data is inked in for release later today. Anything other than the expected quarterly figure of 0.3% will prove market-moving for GBP EUR. Anything below expectations would send the pair down towards the 1.1600 level which it made a run at last week.

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