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Pound Sterling to Euro (GBP/EUR) Exchange Rate Outlook - British Pound Climbs Today on German ZEW Confidence Reports

June 16, 2015 - Written by John Cameron

GBP to EUR Exchange Rate Up 0.25% Today as Euro Driven Lower by German Confidence Data

A sharp slide in the ZEW economic sentiment surveys for both Germany and the Eurozone helped the Pound Sterling to Euro (GBP/EUR) exchange rate advance on Tuesday, and the currency pair achieved a high of 1.3867 during the European session. Gains in the GBP/EUR exchange rate were also due to the UK's Consumer Price Index revealing an increase in inflation in May. While the BoE is still likely to keep interest rates on hold for the foreseeable future, the fact that the UK emerged from deflation was Pound-positive.


Greek Discussions End without Any Progress Made, GBP to EUR Exchange Rate Advances

Last night’s news that last-ditch debt discussions between Greece and her creditors had broken down without an agreement being reached has ensured that this week’s session in the global currency markets gets under way with investors in a firmly risk-off mood.

GBP/EUR exchange rate trending at 1.3820

An official statement from the European Commission confirmed that, ‘while some progress was made, the talks did not succeed as there remains a significant gap. On this basis, further discussion will now have to take place in the eurogroup.’ What this missive did not make mention of was the fact that the debt talks between the delegation from Athens and the euroland policymakers had lasted only 45 minutes, suggesting that there is little in the way of common ground between the two factions.

Greek Default Expected if Bailout Funds aren't Unlocked, Euro Could Fall against US Dollar (USD), Australian Dollar (AUD) and Pound (GBP)

Greece needs to reach an accord with her creditors on economic reforms in order to qualify for its next tranche of €7.2bn emergency bail-out funding. The debt-stricken Hellenic state is due to pay the International Monetary Fund some €1.5bn in repayments by the end of this month, so without an agreement, a messy debt default is inevitable. The Pound Sterling euro exchange rate opened up for the week at 1.3853 GBP EUR last night – well ahead of its Friday closing level of 1.3820. This price gap higher is ordinarily taken by technical analysts as a positive indicator for a pair, however investors watching the GBP EUR exchange rate will be looking for a ‘closed window’, (i.e. a move back below Friday’s close of 1.3820), to cancel out this positive signal.

At the start of the week the Pound Sterling to Australian Dollar (GBP/AUD) currency pair was achieving 2.0110

South African Rand (ZAR), Australian Dollar (AUD), New Zealand Dollar (NZD) Exchange Rate Volatility Forecast this Week

Elsewhere, the VIX ‘Fear Index’, which measures the volume of protective ‘put’ orders placed by US equities traders, was closed at the time the global currency markets re-opened for business last night. However, grey markets forecasting the level of the key indicator were trading and they instantly pointed to a bout of risk aversion from market participants after news of the debt talk collapse broke. Analysts therefore predict that there could be losses to come for the risk-driven Australian Dollar (currency:AUD), New Zealand Dollar (currency:NZD) and the South African Rand (currency:ZAR) during trading this week.

The GBP/ZAR exchange rate was trading in the region of 19.2780

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