The GBP EUR exchange rate continued advancing this morning as investors became increasingly concerned about the possibility of Greece crashing out of the EU due to its explosive levels of debt.
As it stands, the Pound Euro pairing is trading comfortably above 1.17 and is close to its highest levels of 2017 so far.
While the Pound has been boosted by a couple of recent developments, its the current weakness in the Euro which is really lending the pairing support.
Rise in Pound Euro (GBP EUR) Rate Over Greek Debt Fears
The Euro (EUR) slumped against the Pound this morning as markets feared that Greece’s unsuitable levels of debt are making ‘Grexit’ a very really possibility.
This was exacerbated by comments from Germany’s hard-line finance minister who was pushing for Greece to leave the Eurozone if it sought a debt cut. Saying; ‘We can’t undertake a debt haircut for a member of the European single currency, it’s ruled out by the Lisbon Treaty. For that, Greece would have to exit the currency area. The pressure on Greece to undertake reforms must be maintained so that it becomes competitive, otherwise they can’t remain.’
Greek Prime Minister Alexis Tsipras has repeatedly butted heads with members of the EU, placing a third bailout at risk over his reluctance to implement further austerity measures and adding to fears that Greece may default.
Sterling Sentiment Improves as Brexit Bill Passes
The uptick in the Pound this morning was also supported by the passing of the government’s Brexit bill though the House of Commons as MPs voted overwhelming in favour of backing it.
While the bill passed without any amendments, making a ‘hard Brexit’ more likely, investors seemed upbeat as it will finally give some certainty over the whole process.
However the legislation could still be delayed by the House of Lords who are yet to vote on it as the greater number of Lib Dem peers could hinder the bill, preventing Theresa May from invoking Article 50 in March as she planned.
GBP EUR Exchange Rate Forecast: UK Production Data Ahead
The GBP EUR exchange may strengthen further tomorrow with the release of the UK’s latest Production figures for the Industrial, Manufacturing and Construction sectors. Analysts predict that the year on year output will have shown a steady rise in 2016, despite fears of a Brexit slowdown.
Meanwhile, a lull in Eurozone data is likely to leave the single currency on the back foot as markets are left to focus on the Greek debt crisis.
Current Interbank Exchange Rates
At the time of writing the GBP EUR exchange rate was trending around 1.17 and the EUR GBP exchange rate was trending around 0.85.