Eurozone Leaders Meet On Greek Crisis
23 August, 2012
It seems like a while since the concerns about the Greek economy have been in the news, simply because many now assume that it just can’t get any worse. The troubled European state has been back in the financial headlines over the last couple of days however, as Eurozone finance chief Jean-Claude Juncker has issued a statement saying that Greece is on its “last chance” to repair its economy. Whilst the chances of this look slim, Mr Juncker has made the effort to praise the efforts being undertaken by the Greek government up to this point, promising that within the next few weeks Greece would finalise a package of cuts worth 11.5bn euros. Efforts are being made to let people know Greece is not alone in solving this crisis, with the French President, Francois Hollande, meeting German Chancellor Merkel in Berlin today, with the both of them meeting Greek Prime Minister Antonis Samaras later this week. One might expect negative news of this stature to create major shifts in the exchange rate value of sterling to euro, but the UK currency only moved up 0.1% against the euro. This is most likely due to the fact that investors are no longer surprised by negative news from Greece, and any attempts to strengthen the Greek economy are seen as a positive thing, regardless of their chances of actually working.
The UK economy itself could be in better shape, with a leading business group, the Institute of Directors, saying that more needed to be done by the coalition to boost confidence in the UK economy. Also, Bank of England policymaker Adam Posen yesterday said that the UK economy was “stagnating” and that if the euro zone situation got worse or if the bloc broke apart it would overwhelm the UK economy, a view long held by the Bank Of England, including Governor Mervyn King. However, concerns about the state of the Eurozone, and negative data from other major currencies in general, has allowed sterling exchange rates to remain steady, even gaining small amounts of strength in areas.
The value of the US dollar fell slightly against the value of sterling on Wednesday, bringing sterling-dollar rates to a 3 month high, with analysts calling demand from a large US investor the reason behind the slight rise. Also causing the US economy worry is the fact that the Congress budget office stating that tax rises due to take effect in 2013 could trigger a sharp slowdown in the US economy. On the other side of the globe, the value of the Australian Dollar is likely to take a small hit today, as ministers announced slowdown in the nations mining sector, one of the nation’s top employers.
With sterling holding its ground in the anticipation of GDP announcements on Friday, it may be a good idea to give your account manager at Currency Index a call to see how we think the rates are going to be affected in the near future, or to book any upcoming requirements you may have.
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