The Pound Sterling to Euro (GBP/EUR) exchange rate declined by around -0.30% on Friday afternoon.
In response to dovish comments made by the Bank of England’s (BoE) Chief Economist Andrew Haldane, the Pound softened versus most of its major peers. Friday has seen a continuation of the declination after domestic data produced mixed results.
The Euro, meanwhile, edged higher versus many of its most traded currency rivals in spite of reasonably disappointing data. The uptrend can be attributed to easing tensions regarding a Greek exit from the Eurozone as Athens rushes to draft a reform proposal that will be acceptable to creditors.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.3795.
Pound Sterling (GBP) Exchange Rate Dives on Haldane Comments
After Andrew Haldane gave a speech on Thursday, the Pound resumed a bearish trend. Haldane said that the BoE should consider cutting interest rates if inflation threatens to decline further. This is in direct contrast to Governor Mark Carney who stated that it would be ‘extremely foolish’ to loosen policy in the face of lower oil prices.
‘Given the asymmetry of inflation risks, I think the chances of a rate rise or cut are broadly evenly balanced,’ Haldane said in a speech to businesses in central England. ‘In other words, my view would be that policy may need to move off either foot in the immediate period ahead.’
‘An interest rate cut by the Bank of England still looks highly unlikely as (Haldane)… looks to be pretty isolated in his views — at least for now,’ said Howard Archer, chief UK economist at IHS Global Insight.
The Pound Sterling to Euro (GBP/EUR) exchange rate dropped to a low of 1.3780 today.
Euro (EUR) Exchange Rate Edges Higher as Grexit Fears Ease
The situation between Greece and its financial creditors has been such a rollercoaster ride of late, it has had a marked affect on investor confidence. The latest development is that Greece is now rushing to draft a reform proposal that will please creditors lest they have no funds to prevent bankruptcy.
Joan Hoey, regional editor at the Economist Intelligence Unit, says last night’s talks may have averted a complete meltdown in relations: ‘The early-hours talks resulted in a commitment by Mr Tsipras to come up with a new reform package within days and provided a breathing space for the beleaguered Greek government.’
‘We have learned that the technical teams are preparing a detailed list of their requirements for fact-finding about the operations of the Greek government and plans for ongoing reforms. This is a constructive development, which the Ministry of Finance welcomes, as it will bring clarity to the Brussels Group deliberations and allow them to proceed in an orderly and effective way, consistent with the February 20th agreements,’ stated the Guardian’s correspondent in Athens, Helena Smith.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Losses
Given the lack of data to curb the trend, and with Grexit fears easing, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold losses for the remainder of the European session. Any significant fluctuations will be as a result of geopolitics, with trader focus firmly set on the ongoing situation in Greece.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a high of 1.3839 today.