Greeks say NO but deal still possible

With the news that Greece voted no in Sundays referendum dominating the news currently, yesterday was a quiet day on the market. GBP/EUR rates remained up and down within a tight range, and have not shown a break out following the news of the no-vote. Despite what should have been news that was detrimental to Euro rates the actual Eurozone data releases yesterday was positive, with German Factory orders and Eurozone Sentix Investor confidence up. This allowed the Euro to actually gain throughout the day, and combined with some weak US non manufacturing PMI data the dollar gained around ¾ of a cent against the Greenback, with Sterling gaining also almost a cent.

Many of you may find this baffling given the news of Greece’s no vote and may be asking, why?

As has been mentioned in recent weeks and many of the previous Currency Index reports much the speculation and uncertainty surrounding Greece had been priced in so to a large extent the news is of little shock to the speculators. Add to this that despite the no-vote the actual implications of that are yet to be seen. Discussions will still be ongoing and even yesterday the IMF released a statement saying they were there to help if needed. So as yet, nothing is final and suggestions that Greece are leaving the Euro are perhaps a little premature. Certainly over the coming days the dust will settle and it will become more apparent as to how this situation might be resolved. But still do not rule out an agreement between Greece and the IMF. And if that happens we can still expect the Euro rates to strengthen and drop by perhaps a few cents.

Today could see indications given for how this may play out as we have an E.U extraordinary Summit to discuss what is currently happening, and where it is suggested Greece will present a new aid deal proposal. Add to that this afternoon we have the UK NIESR GDP estimate which is a key release for the UK, so unlike yesterday we may see some volatility in rates.

A word of warning to those waiting

We have not seen in recent weeks GBP>EUR rates improve much past where they are currently sat. Even if you go back to February when in the space of 10 days the Cypriots shut their banks, the Swiss pulled the Euro peg, and the ECB announced a €60 billion a month Euro bailout package. This is despite 2 weeks of stalemate discussions and now the announcement that the Greek people do not want further austerity. So if you are still waiting on in the hope that rates will suddenly shoot up to 1.50, you may want to reconsider holding off. As if any form of positive agreement is reached (which is still a strong possibility) we could see rates drop by 3 or 4 cents quickly which if you are sending 100k GBP overseas could reduce your Euro amount by a few thousand pounds!

Stay in close contact with your Currency Index account manager if you do have anything coming up as they can help you stay well informed in what is a particularly volatile time, and assist you in making the most of your transfer.