Today's Pound Sterling to Euro (GBP EUR), Euro to US Dollar (EUR USD) Exchange Rates Outlook Remains Volatile on Greek Deal Talks
While Greek developments will be in focus, investors were looking to the UK's Consumer Price Index and the ZEW Economic Sentiment surveys from Germany and the Eurozone for guidance. Disappointing confidence data forecasts would either send the GBP/EUR pairing to 1.41, or should the UK unexpectedly enter deflation, the Pound exchange rate complex may tumble vs the Euro and the US Dollar.
Earlier...
The British Pound has struggled to make any headway against the Euro exchange rate complex overnight, as EU leaders talked through the night in Brussels in a bid to agree terms for a new bailout for Greece.
Reports suggest that a draft compromise has been put to the emergency summit but no details have emerged so far. Without a new bailout, Greece’s banks face certain collapse and the country could then exit the Euro.
The struggling Euro-zone nation is being pressed to pass legislation on a series of reforms by Wednesday before any talks on another bailout can begin. The tension is still there though with finance ministers submitting a list of measures to the leaders following two days of fraught discussions with one Greek government official describing the proposals as humiliating to Greece. The summit was paused for several hours overnight to allow talks between Alex Tsirpas, Angela Merkel, Francois Hollande and the EC President Donald Tusk.
A quick foreign exchange market summary before we bring you the rest of the report:
On Thursday the Euro to British Pound exchange rate (EUR/GBP) converts at 0.856
At time of writing the pound to euro exchange rate is quoted at 1.169.
The live inter-bank GBP-CAD spot rate is quoted as 1.717 today.
The pound conversion rate (against australian dollar) is quoted at 1.914 AUD/GBP.
The pound conversion rate (against us dollar) is quoted at 1.251 USD/GBP.
NB: the forex rates mentioned above, revised as of 2nd May 2024, are inter-bank prices that will require a margin from your bank. Foreign exchange brokers can save up to 5% on international payments in comparison to the banks.
Euro (EUR) Exchange Rate Holding Steady against Pound (EUR/GBP), US Dollar (EUR/USD) as Investors Forecast Greek Deal
This morning it was announced the summit was reconvening to discuss a “compromise proposal”. The debt crisis in Greece is constantly evolving and looks set to go into yet another week. The markets and particularly the Euro are very calm this morning with the single currency remaining resilient despite the looming prospect of a Greek exit if no deal is agreed. Deadlines and hard deadlines come and go and EU leaders continue to talk both sides at this stage still willing to find an agreement. However, if the talks fail, the immediate focus will shift to the ECB and its decision regarding providing ELA to Greek banks. The ECB has capped ELA at €89 billion since June 28th and as a result, capital controls have been in place in Greece with banks shut for the past two weeks. If no agreement is reached, the ECB may reduce or completely withdraw its support for Greek banks. The would trigger a deeper banking, economic and social crisis in the country. If markets were to deteriorate in the event of a breakdown in talks, we would expect the ECB to intervene and limit any contagion and calm market turbulence.
Chinese Stock Market Drives Australian Dollar (AUD), NZ Dollar (NZD) and Rand (ZAR) Foreign Exchange Market Movement
This would go some way to explain why market reaction has been relatively muted despite the escalation in the Greek crisis over the past few weeks. It will be busy week for the ECB and the President Mario Draghi even before it gathers for its July governing council meeting on Wednesday. The other major news over the past week has been the events coming from China. The stock market there has fallen by around 30% from its June 12th highs with falling prices leading further selling in market that is saturated by retail investors. The sharp declines have led to risk aversion in global market with the commodity-driven currencies like the Australian and New Zealand Dollars worst affected. Chinese authorities have introduced a raft of measures designed to restore market confidence and the Shanghai Composite index was up another 3% overnight. Meanwhile, the semi-annual testimony from the Fed Chair Janet Yellen to the U.S Congress will be the main U.S event of the week. Fed rate hike expectations still suggest a more aggressive pace of tightening than the market is currently pricing in.
GBP, EUR and USD Related Data Released 13th July 2015
U.S 19:00 Federal Budget (June)