Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Strengthen after UK Government Borrowing Narrows, Greek Talks Fruitless
The Pound Sterling to Euro (GBP/EUR) exchange rate advanced by around 0.38% on Friday morning.
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After UK labour market and retail sales data printed positively, futures traders brought forward bets as to the timing of a Bank of England (BoE) interest rate hike. Friday has seen a continuation of the Sterling appreciation after the Office for National Statistics (ONS) stated that UK government borrowing eased in May.
The shared currency slumped versus many of its peers after talks between Greek and Eurozone officials ended without progress being made. Most now feel that the Hellenic nation will not be able to secure a deal to unlock funds before June 30th when the current deal ends and credit dries up. Greek officials are now holding on to hopes that the European Central Bank will provide an aid package.
The Pound Sterling to Euro (GBP/EUR) exchange rate is currently trending in the region of 1.4014.
Pound Sterling (GBP) Exchange Rate Forecast to Strengthen against the Common Currency (EUR) on Public Sector Borrowing
Over the past few days the Pound rallied thanks to speculation that the Bank of England will increase the cash rate in 2015 with inflationary headwinds easing. A sharp wage growth acceleration and low inflation is likely to stoke consumer spending and improve confidence significantly. Some analysts are going as far as to say that they now expect the British central bank to begin liftoff in and around the time as the Federal Reserve.
Friday has seen the Pound continue to strengthen versus its peers after government borrowing dropped. ‘In May 2015, public sector net borrowing excluding public sector banks (PSNB ex) was £10.1 billion; a decrease of £2.2 billion, or 18.0% compared with May 2014. This decrease in net borrowing was largely due to a decrease of £1.6 billion in central government net borrowing, combined with a decrease of £0.6 billion in local government net borrowing. Central government receipts in May 2015 were £45.0 billion, an increase of £1.8 billion, or 4.1% compared with May 2014,’ stated the ONS.
The Pound Sterling to Euro (GBP/EUR) exchange rate has fallen to a low of 1.3955 today.
Euro (EUR) Exchange Rate Forecast to Soften against the British Pound as Grexit Potential Spooks Investors
Thursday’s talks to discuss the situation in Greece and review Athens’ plans for reforms failed to progress, with the relationship between Greece and Eurozone officials fraying significantly; many now don’t expect the Hellenic nation to secure aid before credit runs dry. An emergency summit on Monday has been called as a last-ditch effort to secure funds before a large consolidated International Monetary Fund (IMF) payment is due. ‘The key emergency is to restore a dialogue with adults in the room,’ said Christine Lagarde, the International Monetary Fund chief who attended the session.
Meanwhile in Athens, the government said it was preparing for the return of the drachma. ‘If we are forced to say the big no, the difficulties will last for a few months,’ said the social security minister, Dimitris Stratoulis. ‘But the consequences will be much worse for Europe.’
Pound Sterling to Euro (GBP/EUR) Exchange Rate Forecast to Hold Gains ahead of Monday’s Emergency Summit
With investor confidence ebbing away the longer Greek talks go on without any notable resolution, the Pound Sterling to Euro (GBP/EUR) exchange rate is likely to hold gains ahead of Monday’s emergency summit to discuss Greece. The Pound is likely to continue trending in a position of strength as futures traders speculate towards a sooner-than-expected benchmark rate hike.
The Pound Sterling to Euro (GBP/EUR) exchange rate climbed to a high of 1.4031 today.