Euro (EUR) Exchange Rate Forecast: EUR/GBP, EUR/CAD Advances as Greek Election Losses Overdone, Oil Tanks
The Euro to Pound Sterling (EUR/GBP) exchange rate recorded gains in Monday’s European session as it was thought that losses accredited to the recent Greek election were excessive.
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Sunday saw anti-austerity party Syriza voted into power, with the party being just two seats short of a majority vote. The political party wants to renegotiate the conditions of its bailout with its creditors, which could see Greece leave the 19-nation Eurozone as not all members of the bloc are open to discussions.
After the European Central Bank (ECB) announced its plans to embark on a period of QE from March of this year to September 2016, the Euro broadly softened.
Strategist Alessandro Bee stated: ‘Syriza’s win won’t be as bad for markets now as it could have been a few months ago. Tsipras [new Greek Prime Minister] is less aggressive and willing to negotiate. The result will affect sentiment in Greece, but in a broader European context it’s just a blip. Markets are still in a risk-on mode and any news is dwarfed by the ECB stimulus programme.’
Meanwhile, the Pound Sterling exchange rate was bolstered by statements from Bank of England (BoE) policymaker Kristin Forbes. Monetary Policy Committee (MPC) member Forbes suggested that the central bank could begin hiking rates sooner than forecast if inflation picks up.
Forbes stated that if inflation fell, it ‘would imply an earlier increase in interest rates than currently expected, especially to ensure that any subsequent interest rate increases are slow and gradual.’
Furthermore, Forbes suggested that ‘cheap credit’ is tapering as major banks prepare to hike interest rates.
Forbes stated: ‘Whenever one large developed country starts to raise rates, that is going to be a wake-up call to investors and markets that at least in some economies the era of very low rates, very cheap credit, is starting to come to an end.’
Any dovish statements from the BoE in coming weeks will offer little support to the Pound Sterling to Euro (GBP/EUR) exchange rate.
Meanwhile, the Canadian Dollar has softened dramatically as oil prices hover near a six-year low. Black gold continued its tumble when the new king of Saudi Arabia announced that production would remain unchanged.
In addition, continuing price declination is forecast. Industry expert John Kilduff commented: ‘There’s been a rush to call a bottom. The fundamentals are still stacked against a rebound.’
If the price of oil keeps softening, the Canadian Dollar to Euro (CAD/EUR) exchange rate could keep falling.
Euro to Pound Sterling (EUR/GBP) and Canadian Dollar (EUR/CAD) Exchange Rate Forecasts
Tuesday is likely to see major Pound Sterling movement as UK Gross Domestic Product (GDP) ecostats are forecast to show a slowing in growth.
Both Canada and the Eurozone’s most influential day could be Friday with the release of Canadian GDP and Eurozone Unemployment Rate and Consumer Price Index (CPI) stats.
The Euro to Pound Sterling (EUR/GBP) exchange rate is presently trending in the region of 0.7487. The Euro to Canadian Dollar (EUR/CAD) exchange rate resides at 1.3998.