EUR/GBP Fundamental Analysis
In yesterday’s European trading session, the Euro gained versus the Great British pound as the European finance leaders discussed Greece’s financial aid. The Sterling on the other hand turned lower on speculations that UK’s austerity program is to extend until 2018. Considering now that an agreement on Greece’s debt has been reached, the single currency is expected to incline in today’s European session.
Yesterday’s meeting of the European leaders and the International Monetary Fund (IMF) did not disappoint markets as they were able to finally agree on the target for Greece to reduce it public debt. It could be recalled that Eurogroup Head Jean-Claude Juncker favored 2022 as a better year for the indebted country to trim down its debt, while IMF Managing Director Christine Lagarde deemed 2022 as an appropriate target. And yesterday, the officials made a significant step towards the disbursement of the much awaited Greek aid, when they decided that by 2020, Greece would be able to cut its debt to 124 percent of GDP. No specific details were agreed upon as to how the new Greek programme would be implemented thus, further talks are likely to be held. As of now, the country is cleared to receive loan funds of 34.4 Billion Euros in December, according to reports. Despite the agreement, increasing risks of a recession due to poor economic fundamentals are seen to weigh on the Euro versus its peers.
Meanwhile, the Pound is set to decline as the Institute for Fiscal Studies said that Chancellor of the Exchequer George Osborne is likely to extend his austerity program until 2018 to improve prospects for Britain’s economy. But the Pound is likely to pare losses as Bank of Canada (BOC) Governor Mark Carney was unexpectedly appointed as the next governor of the Bank of England (BOE), as some believe that he would be able to understand the UK economy, which would help the Sterling. Given all the foregoing factors, buy is deemed a favorable position for the Euro-Pound pair in today’s European trades.
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