Busy end to a Greek focused week

5 June, 2015

Tom Arnold

This week has been all about the Greek debt negotiations with expectations of a deal being agreed in the short term giving a significant boost to the Euro, which has gained around 5 cents against Sterling in just a few days. The will they, won’t they guessing game is back in full force in the last 24 hours though, following a leak of some of the details of the Greek side’s proposals. The view is that the Greeks are still asking for far too much; the main request being pushing back all June payments to the end of the month, and as such having achieved the strongest position for some time in the last 48 hours, we have actually seen the Euro slightly drop away again.

However it is still widely expected that the agreement will be reached soon, at which point we would expect the Euro to make further gains, meaning anyone looking to buy Euros should probably consider trying to secure their rate in advance. There is the solace for those who can’t, that other countries in the single currency bloc are also seeing an increase in popularity of Syriza-similar anti-austerity parties, most notably Spain, which could mean further humps in the road for the Euro to come.

Today sees some quite serious data out across the globe, with European GDP, UK Consumer Inflation Expectations and US Non-Farm Payrolls definitely the leading lights.

European GDP is expected to have held firm at 0.4%, but the Euro could be vulnerable to any, even slight, change in this figure – growth is hard to come by anywhere in the global economy at present, but with all of Europe’s other problems, it is struggling to match other performers and any further signs of weakness here could be punished by the currency markets.

UK inflation is a key point for the Bank of England, UK government and of course the UK’s consumers, so while this figure is only a survey of consumer expectations, rather than an official ONS reading, it is important for the Pound as a negative figure would likely affect the chances of consumers putting their hands in their pockets in the short term, which will certainly knock on to the UK economy’s and hence Sterling’s performance.

US Non-Farm payrolls is always a critical indicator of how the US economy is coming along, and this month is no different. The forecast is for 200,000 new jobs and critically for a rebound in average earnings from the dip last month. If these figures come to pass then it might give the FED a further push down the road towards interest rate hikes, which had been imminent, but in recent months had slipped away as supporting figures stalled a little.

So there is lots going on and lots of varying factors that could affect your upcoming currency purchase – make sure you stay in close contact with your CI account manager to be kept informed of exactly what is happening and what expectations are as the data rolls in.