Both the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates advanced on Monday and could extend gains tomorrow if the UK’s inflation report defies forecasts for stagnant consumer prices.
Pound Sterling to Euro (GBP/EUR) Exchange Rate News: Greece Reaches Agreement with Creditors, but Will Aid Be Released?
As a fresh week of trading got underway the Pound Sterling to Euro (GBP/EUR) exchange rate was able to rally from a low of 1.3884 to achieve a high of 1.4067.
The pairing advanced in spite of months of infighting between Greece and its creditors finally resulting in an agreement being reached. The Hellenic nation had to make serious concessions in order to progress to negotiating a third bailout and the reaction to the terms demanded has been fierce.
Although many have criticised the requests for further tax hikes and spending cuts, Greece really does have its back to the wall and PM Alexis Tsipras had little choice but to agree to measures 61% of his public voted against at the recent referendum.
After the summit Tsipras commented; ‘The agreement is difficult, but we averted the transfer of public property abroad, we averted the plan to cause a credit crunch and the collapse of the financial system. We put up a hard fight for the past six months and we fought to the end in order to get the best out of it, to get a deal which will allow the country to stand on its feet and the Greek people to keep fighting.’
If Greece is to receive aid, laws on taxes and pension payments must be passed by July 15th. Given the opposition such revisions are likely to come up against, investors aren’t confident a Grexit can actually be avoided and the Euro continues trending in a broadly softer position.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate News: ‘Cable’ Holds above Technical Resistance in Spite of Federal Reserve Interest Rate Remarks
The Pound Sterling to US Dollar (GBP/USD) exchange rate advanced above 1.55 on Friday as the UK’s trade deficit narrowed by considerably more than expected in May.
The narrowest shortfall for two years helped Sterling advance on a number of its currency counterparts and ‘Cable’ managed to hold gains in spite of comments issued by Federal Reserve Chairwoman Janet Yellen.
Recently bets that the Fed would put off adjusting borrowing costs until next year have kept the US Dollar under pressure, but Yellen seemed keen to reassure investors that a 2015 adjustment is still on the cards.
During a speech given on Friday night Yellen asserted that it would be ‘appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalising monetary policy.’
However, ‘Greenback’ gains were a little limited as the central bank chief also referenced the slack remaining in the US labour market.
She stated; ‘But it is my judgement that the lower level of the unemployment rate today probably does not fully capture the extent of slack remaining in the labour market – in other words, how far away we are from a full-employment economy.’
A lack of notable data for either the UK or US limited Pound Sterling to US Dollar (GBP/USD) exchange rate movement on Monday.
Pound Sterling (GBP) Exchange Rate Forecast – GBP/EUR, GBP/USD Predicted to Fluctuate on UK Inflation, Employment Data, US CPI and ECB Interest Rate Decision
Over the next five days there are several highly influential economic reports scheduled for publication in the Eurozone, UK and US so we can expect GBP/EUR, GBP/USD exchange rate movement.
The main causes of Pound fluctuations are likely to be the UK’s inflation and employment reports.
The pace of consumer price growth in the UK is believed to have stagnated in June following a modest 0.1% annual increase in May. However, rising inflation would lend support to BoE interest rate hike projections and could push the Pound higher.
Similarly, the UK’s employment data might show a Pound-supportive increase in average earnings or a dip in the level of joblessness.
Meanwhile, both the US Advance Retail Sales number and US Consumer Price Index have the potential to prompt serious shifts in the US Dollar and investors with an interest in the Euro will be focusing on both developments in Greece and the European Central Bank’s (ECB) upcoming interest rate announcement.
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.4065, the Pound Sterling to US Dollar (GBP/USD) exchange rate was trending in the region of 1.5536, the Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the region of 0.7108 and the US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6436.