Pound Sterling to Euro (GBP EUR) Exchange Rate Moves Higher On European Budget Wrangle

Modified: Sunday, 17 November 2013 23:06 BST - Written by Tim Boyer

STORY LINK Pound Sterling to Euro (GBP EUR) Exchange Rate Moves Higher On European Budget Wrangle

The Euro Pound exchange rate (EUR/GBP) suffered a blow earlier when news broke of a potential debt standoff between the European Commission and Spain and Italy. Meanwhile, good news from the North Sea could provide support for Pound Sterling in the weeks to come.

Pound Sterling to Euro Exchange Rate Tests Higher

The Pound Euro exchange rate (GBP/EUR) tested higher earlier today on the news that leading eurozone states Spain and Italy are facing a potentially messy budget wrangle with the European Commission over their 2014 spending plans.

The latest budget forecasts from the two Mediterranean states drew a warning from the heads of the European Commission that they may not meet their latest stringent fiscal rules. The development raises the spectre of a damaging stand-off between the eurozone’s policymakers and the governments of Spain and Italy. The potential for such a rift caused investors to shift out of euro-denominated assets during today’s session, propelling the Pound euro exchange rate (GBP/EUR) up to as high as 1.1962 earlier.

Next Week Brings Releases That Could Send the Pound Euro Exchange Rate Higher

The early part of next week’s session brings the publication of a brace of releases which could send the Pound euro exchange rate higher still. Tuesday morning’s German ZEW survey will be closely-watched by investors following the recent apparent softening in the economic figures coming out of the eurozone’s premier economy. The minutes of November’s Bank of England minutes are set for release the next morning and following the Bank’s insistence that UK interest rates will be increased sooner rather than later, the potential exists that the notes will trigger further upside for GBP EUR.

Elsewhere, there was further positive news for Sterling earlier when the news broke that consent has been given for the development of a £4bn oil field off the Shetland Islands. The Kraken field is thought to contain well over 100m barrels of oil, so the news came as a major boon to the UK economy and the Pound Sterling alike.

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