GBP/ EUR May Lose Ground Further in the Coming Week

By ForexBrokers · Filed Under News Leave a Comment 

Given the current happenings in the Eurozone, it appears that the Euro and GBP may be coming under further pressure this week.

Both these currencies have been floundering for a while now and in comparison the dollar is staying relatively steady as of now. As Greece’s plans for the immediate future continue to be the big unanswered question, analysts are predicting that the uncertainty alone will keep the Euro/ GBP greatly subdued.

Focus is on The Possibility of Greek Euro Exit 

The focus is firmly fixed on the subject of whether Greece will finally pull out of the Euro or remain within this circle of nations. This is a fear that has been doing the rounds for a good number of weeks now. However the subject was never publicly discussed.

Now, European Central banks seem to have agreed that the possibility of this happening is high enough to warrant bringing this topic out of the dark. Evidently, the level of confidence in Greek’s economy is not likely to improve any time soon unless some clarity is achieved about these issues.

Inadequate Fiscal Measures by Other Eurozone Nations

Italy is trying to shore up its economy by exploring the market for selling bonds. Up to €3.5bn worth of bonds may come into the market from the 2025, 2022, 2020 and 2015 series. While this may help the government gain some financial leverage, it is not doing much to enhance the confidence that investors have at the moment in Italy.

In Spain, fiscal measures are taking the form of a proposed sale of T bills spanning 12 and 18 month durations. Given that the general opinion about the Spanish banking reforms is not positive, it is difficult to say whether this move will have the desired effect. General consensus is that Spain is moving too sluggishly with its banking reforms for them to be effective.

Germany’s Positive Growth Data May be Overshadowed 

The only Eurozone nation that is expected to post positive performance is Germany. However, even here, the positives are expected to be only marginal. Even if the nation does live up to expectations and show a turnaround, this is likely to be overshadowed by the negative news from many of the other Eurozone nations.

Forex traders can safely bet that Eurozone currencies will take a while yet to even stabilize in the current circumstances. Until then, a decline in Euro/ GBP value is a more realistic expectation to have.

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