Monday, 8 June 2015

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 causes GBP/USD rates to fall 


On Friday we saw the latest US Non-Farm Payrolls, which is a measure of new jobs created excluding the agricultural sector (because that’s seasonal). The number was 50,000 more than expected, which is a very robust result for the US. As such, the US Dollar gained strength and pulled GBP/USD rates lower. 


What could affect exchange rates this week? 


Below I’ve listed the main scheduled releases that I think could affect exchange rates. Of course ongoing developments in Greece, and the current G7 meeting could also affect things at any time. For a more in depth discussion about what could affect the exchange rate you’re looking at, feel free to get in touch with me. 

Monday 8th June 2015 – Today is relatively quiet, with some Industrial Production data and Trade Balance numbers from Germany, which had little effect on exchange rates. Later today we have Retail Sales numbers from the UK that are a good barometer of overall UK economic activity. If good, Sterling may gain. 

Tuesday 9th June 2015 – IN the UK today we have an inflation report. Depending what it contains, it could cause speculation on when UK interest rates may rise, and so could affect the Pound. We also have EU Gross Domestic Product. I’m expecting a quarterly reading of +0.4%. If the actual number is higher than this then GBP/EUR rates could fall. 

Wednesday 10th June 2015 – Today is a very important one for the UK. We have: Manufacturing Production, Industrial Production, RICS House Prices and the latest GDP estimate from the NIESR. All of these releases give a good idea how the UK economy is faring, and so simply put, better than expected numbers would strengthen the Pound and vice versa. Further afield, New Zealand has its latest Interest Rate decision and policy press conference, so GBP/NZD could also be affected. 

Thursday 11th June 2015 – Today Australian releases lots of Unemployment numbers along with House prices, so those watching the GBP/AUD rate should watch for today. Over in the United States we have Jobless Claims, and the latest measure of US Retail Sales. If these numbers continue to show an improvement in the US Economy, expect GBP/USD rates to fall. 

Friday 12th June 2015 – A very quiet end to the week, with the only data of note Germany wholesale Prices and US inflation data. 

To discuss your currency requirement, find out what data could affect the exchange rate you’re looking at, or to simply get a quote on the exchange rate I can offer you, follow the link below.