The Euro rose versus the Great British pound in yesterday’s European trading exchanges amidst lengthy discussions of the European finance leaders on how to restructure Greece’s debt. Despite conflicting views of the Eurogroup and the International Monetary Fund over the target for Greece reduce its debts, the single currency found support on hopes that the officials would mend their differences and come up with a decision to keep funds flowing into the indebted country. In today’s European trades, a bearish picture for the EUR/GBP pair is likely as the Euro Zone finance ministers failed to reach an agreement with the IMF on how to trim down Greece’s debt.
Hopes of an agreement over Greece’s restructuring program died down when the Euro Zone leaders failed to reach an agreement after long hours of discussions which extended early today. The leaders instead agreed to hold another meeting on Monday and make another attempt to resolve the issue. It could be recalled that Eurogroup Chief Jean-Claude Juncker and IMF Managing Director Christine Lagarde clashed over the target for the Hellenic Republic to cut its debt, with the former believing 2022 to be an appropriate target than the 2020-target pushed by the latter. Conflicts were once again made apparent when the European leaders failed to reach an agreement, saying in a statement that they would have to make further discussions to make Greece’s debt program sustainable. With markets unsure of a Greek decision next week, demand for the shared currency is seen to weaken.
As a better alternative to the Euro in times of economic uncertainties, the Sterling is expected to benefit. However, its gains could be limited as the BOE MPC Meeting Minutes is set for release. A showing of the BOE leaning towards more easing in the minutes, would likely limit gains of the Pound versus the single currency. With all these factors, a short position for the EUR/GBP pair is recommended in today’s European trading session.
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