Showing posts from June, 2015

Euro weakens as Greek crisis continues

Pound/Euro rates were trading as high as €1.43 this morning when European markets opened, due to the mess that is the Greek debt crisis. When markets opened the Euro gained back some of its losses, and at the time of writing GBP/EUR is around the €1.41 mark. Let’s take a look at what’s been going on.

Greece fails to agree to bailout deal 
It now looks almost certain that Greece will miss its debt repayment to the IMF tomorrow. The European Central bank have stopped its emergency lending that was keeping the Greek banks afloat, after Greece announced at the weekend that it would hold a referendum on their bailout terms, and this referendum is next Sunday. Greek banks are now closed, and they have implemented capital controls, meaning that people there are limited to taking out only €60.00 per day. 

Last week, talks between Greece and the Eurozone countries over bailout terms ended without an agreement, and Prime Minister Alexis Tsipras then called for a referendum on the issue to be held …

Pound/Euro hits €1.41 on Greek uncertainty

Tuesday 23rd June 2015 
Since my post yesterday, the Pound/Euro exchange rate has risen by over 2 cents, and at the time of writing sits at €1.41: 

The reasons for the gains is there is as yet no agreement over Greece, and no deal to decide whether Greece and its creditors can get past the political barriers in the way of sealing a resolution. 

Euro zone leaders did agree late last night that the institutions representing Greece's creditors should try to wrap up a detailed agreement by Wednesday evening for their finance ministers to approve and present to them on Thursday. 

So, while there us uncertainty, the Euro is weak. Nothing has really changed though – most still expect a last minute deal to be agreed, and if that happens, expect the rate to correct sharply. 

If you need to buy Euros, then consider getting something done while it’s still over €1.40. While nobody can predict which way the rate will go, each and every time we’ve got to these levels in the last 6 months, it hasn’t…

How solution to Greek crisis could affect exchange rates

Monday 22nd June 2015 
This week, and today in particular, is quite a critical one for Greece, and the GBP/EUR exchange rate along with it. Many headlines are suggesting that this is the ‘Last Chance’ for Greece. There have been many of these before, and I don’t think today will provide a complete solution. 

What exactly is happening in Greece? 
They need to make a debt payment of €1.6 billion by next Tuesday, 30th June. However to be able to actually meet that payment, they need to get a further €7 billion in aid, and that’s what they’re trying to agree today, however to get the funds, the Greeks need to reform pensions and cut spending, which is difficult for their Prime Minister Alexis Tsipras to agree to, given he was elected on the premise of ending austerity. 

Early this morning, he met the leaders of the IMF, ECB and EU commission to outline his proposals. Just before lunch, the EU’s finance ministers started a meeting to see if they can agree on a deal to give Greece the bailout f…

Pound/Euro rates near €1.40 again

Wednesday 17th June 2015
Sterling has gained strength in recent days, after figures showed that UK inflation has turned positive, Unemployment has fallen, and average wage earnings were much better than forecast. This has caused the Pound to gain against other currencies, hitting nearly €1.40 against the Euro, and $1.5750 against the US Dollar:

 Pound/Euro over last week:

Pound/Dollar over last week:

The other reason for the Pound/Euro rate gaining is the ongoing Greek situation. Relations between Greece and its creditors have fallen apart in recent days, and tomorrow there is an important meeting of EU finance ministers to discuss the situation. There are fears that Greece could default and leave the Euro, and this uncertainty is what is causing the Euro to remain weak. 

Most analysts still expect a deal to be reached at some point, and if that happens then I would expect Sterling/Euro rates to fall sharply. If you need to buy Euros and don’t want to take the risk of the rate dropping aw…

Will Pound strengthen against Euro June 2016?

Wednesday 10th June 2015
In the last few weeks, the Pound/Euro rate has fallen significantly, mainly due to the fact it looks like Greece are making progress with regards to their debts. Having said that, in the last 24 hours we’ve actually seen a very slight recovery in GBP/EUR rates, although we’re now a long way away from the 8 year high we saw just a month ago, as you can see from the chart below: 

Since my last post on Monday, Sterling had fallen further against the Euro and other currencies, hurt by concerns over the strength of the UK economy. The Pound is suffering from persistent concerns over the strength of Britain's economy. Recent figures have shown growth in Britain's service sector slowed a great deal in May, while inflation has turned negative for the first time in over 50 years, suggesting the Bank of England will hold off from raising interest rates until at least the middle of next year. 

However despite the GBP/EUR rate falling into the €1.35’s, this morning …

Greece defers debt payment, but Pound/Euro rates fail to recover

Monday 8th June 2015
Greece defers debt payment, but Pound/Euro rates fail to recover
On Friday, it was announced that Greece will defer the payment that was due, and lump it together with a series of other payments due into on single payment of €1.5bn at the end of the month. So given they didn’t make the payment, why didn’t the Euro weaken and GBP/EUR rates rise? 

The news was actually a non-event, and had been widely expected. In fact, the markets seem to think that the delay gives all parties additional negotiating time which could lead to a formal agreement to conclude the bailout. 

The Pound/Euro rate this morning has already fallen nearly a cent, due to the CBI cutting UK growth forecasts, weakening the Pound.

Other EU data in the last few days has been strong, which is stopping the Euro getting any weaker. If the Greeks can indeed come to a conclusion over their debts by the end of this month, expect GBP/EUR rates to fall further. 

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US Jobs data cau…

Pound/Euro rates fall to €1.36 on ECB comments

Wednesday 3rd June 2015 
Not good news for those looking to convert Sterling to Euros I’m afraid. The decline in the GBP/EUR rate has continued today, as you can see from today’s chart: 

The reason for the continued fall today was further strength in the Euro. This was caused by the European Central Bank (ECB) saying that Eurozone’s recovery is set to "broaden and strengthen", as it raised its inflation projections for 2015. ECB president Mario Draghi's comments came in a press conference earlier today. 

This is good news for the EU economy, and strengthened the single currency causing it to become more expensive to buy. The next thing that could affect the rate will be whether Greece makes it's first debt payment on Friday. If they do, then expect the rate to fall further. If they don't then it may recover slightly, but I can't see it getting back to €1.40 any time soon.

What effect did this have on Pound/Euro exchange rates?
The effect on the GBP/EUR rate was …

Why has Pound fallen against Euro June 2015?

Tuesday 2nd June 2015
This morning we have seen GBP/EUR rates plummet, with the currency pair falling by 2.5 cents from €1.3950 this morning, to €1.37 at the time of writing:

What has caused the drop? 
The reason for the drop was a strengthening Euro. Earlier today we saw the latest EU inflation numbers, and these showed that inflation in the Eurozone turned positive in May after five months of negativity, and this revives hopes of an economic recovery in Europe. Earlier this year, the European Central bank embarked on a huge €1.1 trillion Quantitative Easing, or money printing programme in an attempt to stimulate the Eurozone economy, and the figures today suggest that this is working. That is why the Euro gained strength and has become more expensive to buy. 

Meanwhile in Greece… 
Also today there may have been developments in Greece. Their Prime Minister Alexis Tsipras has said that he has issued "a realistic proposal" to its international creditors in an attempt to secure …

UK data disappoints, pulling GBP/EUR rates under €1.40

Last week we saw the Pound/Euro rates above the key €1.40 level, however as with the other 4 or 5 times that’s happened this year, the high rate was not to last, and at the end of last week, poor UK data weakened Sterling, and pulled rates back into the €1.39’s:

Why has the Pound fallen against the Euro? 
On the one hand, it looks increasingly likely that Greece will be able to meet its upcoming debt payments. My view is they are simply trying to negotiate a better deal, hence the delays. This expectation is giving some strength back to the Euro making it more expensive to buy. 

On the other hand, the Pound is coming under pressure due to a poor run of economic data. Investors are starting to worry about the implications of the UK leaving the EU, and this uncertainty is stopping investment and weakening the Pound. Prime Minister David Cameron's introduced a law last week that will guarantee the EU referendum will be held by the end of 2017. 

Also last week we saw other poor data, suc…