Greece have now become the first developed country to default on a loan to the International Monetary Fund (IMF) and now joins Zimbabwe, Somalia and Sudan also in arrears. In this game of chicken Greece changed tact at the last minute and requested a two year bail out for €29.1 billion just hours before the deadline to pay the IMF, although no agreement was made. Greece wants to effectively borrow more money to cover its debt repayments for the next two years. To the man on the street it is a case of borrowing on more credit cards to pay the old ones off. Fitch also downgraded Greece just before the unprecedented default.
Expect major volatility in the coming days as a Grexit is now more likely although it will depend on what happens at the referendum this Sunday on whether to accept the creditors’ proposals and ultimately whether to stay in the EU. This referendum is not a certainty either as any new agreement could remove the necessity. The next major payment is Monday 20th July where Greece must pay €3.46 billion to the ECB. For information on contract options, click here.
The pound has received a boost following stronger GDP numbers revised up from 0.3% to 0.4% in the first quarter. On an annual basis it was revised from 2.5% to 2.9% from the first quarter of 2014 - It is extremely rare to see an adjustment of this scale hence the positive market reaction for the pound. The figures highlighted that household disposable income rose at a rate of 4.5%, the fastest pace since 2001. The Bank of England will be paying particular attention to these numbers as they correspond with the strong wage growth figures from two weeks ago and will put pressure on them to act. Voting patterns at next week’s meeting are likely to now change
UK consumer confidence also reached a fifteen month high as per market research company GfK. This morning sees UK Purchasing Managers Index data for the manufacturing sector. Having seen such a strong pound against most currencies in June then these figures are unlikely to impress today as a strong currency hurts exports. It could present a risk for the pound this morning.
This afternoon sees a number of US releases to keep the markets moving to include manufacturing numbers, mortgage applications and employment data ahead of the non-farm payroll numbers tomorrow. A decline is expected on Thursday which could result in some further dollar weakness. How things develop in Greece will have a direct impact on the dollar. The US dollar retains its safe haven status and any major deterioration in Greece will see a flight to safety to the greenback. Buyers of dollars may wish to take advantage of the better levels currently available. For information on dollar transfers then please click here
The Canadian dollar has weakened following Canadian GDP numbers which unexpectedly moved into negative territory. Expectation was for growth of 0.1% but it actually arrived at -0.1% for the first quarter pushing the Loonie to a 3 month low. A shrinking economy now puts an interest rate cut firmly back on the cards which may now happen as soon as the July meeting. This would be the second cut since the Royal Bank of Canada (RBC) decided to cut in January. Buyers of Canadian dollars could see even better opportunities as a result. Today is a bank holiday for Canada Day so eyes look to Friday for official manufacturing numbers from the RBC.
James and his colleagues are always courteous and helpful. I have also never been able to find rates of exchange that are more competitive. I am particularly impressed with the service, as I am not in the habit of transferring massive amounts!
As always a really quick and easy transaction. James is very knowledgeable and helpful. Great rates.
Always helpful and they always give rates at the very top of the range. Quick transfers to our french bank account – highly recommended. Well done James Lovick 😉