GBP/EUR rates spiked yesterday as the IMF slammed the deal proposed to the Greeks by the European community saying it was unethical. This drove GBP/EUR rates up towards the highest levels seen in nearly 8 years giving buyers a fantastic opportunity. This however, like most spikes, was short lived. At 9:30 yesterday UK unemployment data was released which showed a steep increase in the number of people out of work across the UK by an additional 15,000. This was the first rise in over 2 years which caused Sterling weakness and for the SPIKE to disappear almost as quickly as it arrived.
Yesterday evening GBP/EUR rates however climbed further up reaching a new 8 year high as concerns built about the Greek government vote. They voted to accept the debt terms meaning they are one step closer to their third bailout. The next steps; the ECB will look at bridge loans, governments across Europe including France and Germany have to also vote on and agree to the bailout, more loans from the IMF and potentially a change in government in Greece again as the Syriza party were hammered last night.
Rates are now up OVER 1.43 and have the potential to continue as concerns now intensify about the next government in Greece; will they go through the same cycle as we have seen over the last 3 months? Plus the question as to whether a debt ratio of over 200% is sustainable? I would expect some conversations around debt ‘write off’ in the near future.
In the near term all eyes will be on the European Central Bank (ECB) meeting. There will be lots of questions on the structure of the bailout for Greece which could have some influential answers on rates today.
Bottom line there is still a lot of uncertainty in the market at the moment which is why rates are so high. Once we have answers to these points I can still see the Euro strengthening but the Greek situation probably has another 2 or 3 weeks left to run. For a full forecast please contact us here.
Forecasting the USD has been particularly challanging in the short term recently. Concerns with Greece have resulted in a run to safely at times into the safe haven of the USD causing its value to swing widely. Countering this has been continual suggesting that the US will be looking to raise interest rates later this year which I expect to be the foundation of the trend in the next few months.
Last night there was further indications that this is the FED’s view as comments suggested this could happen as soon as September. I generally expect the US Dollar to get more expensive over the next 6 weeks meaning the current levels which are close to a 6 MONTH HIGH represents a good opportunity to buy. Sellers on the other hand may want to hold out in anticipation of an interest rate hike.
There is a host of USD data due this week which could continue to impact markets value. This includes Manufacturing data this afternoon and Consumer Price Index tomorrow afternoon. Both are expected to be positive making the US Dollar more expensive to buy and adds another argument to suggest if you are a USD buyer you should be moving sooner rather than later.
For more information on what could impact your US Dollar situation please get in touch on 0800 328 5884.
Earlier this week a deal was struck with IRAN, in exchange of them decommissioning a majority of their nuclear program, 9 years of sanctions will be relaxed. Iran’s vast oil wealth will now enter the market and has caused oil prices to fall along with currencies dependent on its exports.
This includes the Canadian Dollar which fell on the news by 2%. The Bank of Canada reacted yesterday by cutting both their interest rate and growth forecasts. Buying CAD is now at the best levels seen since 2008!.
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Sending money to France has been so easy. I was amazed at how simple the process was. Steve Eakins is a pleasure to deal with, no fuss or drama just a great, friendly attitude.