Thursday 30th June 2011
Good morning. Following the passing of the Greek vote on austerity measures, the Euro has stabilised and this has pushed GBP/EUR rates down. Also comments from the ECB president this morning signal interest rates are going up in the EU next week, this is likely to push exchange rates to buy Euros even lower. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1095
• GBP/USD 1.6091
• GBP/AUD 1.4984
• GBP/NZD 1.9400
• GBP/CAD 1.5556
• GBP/CHF 1.3409
• GBP/ZAR 10.865
• GBP/JPY 129.29
• GBP/DKK 8.2737
• GBP/NOK 8.6317
• EUR/USD 1.4500
Greek vote on Austerity measures strengthens Euro
Yesterday the vote was narrowly won to push through austerity measures in return for financial aid. The package of tax rises and budget cuts worth about 28bn euros over five years, had been championed by Greek Prime Minister George Papandreou.
If it had been rejected, Greece could have run out of money within weeks. The EU and the International Monetary Fund have demanded that the measures are implemented before they extend further loans to Greece.
The markets have taken the news positively, with markets across Europe soaring yesterday, and the Euro also strengthening, making it more expensive to purchase and pushing GBP/EUR down.
ECB comments – rate rise expected next Thursday
Jean Claude Trichet, the president of the European Central Bank this morning has said ‘strong vigilance‘ is needed on inflation. This is his code word for saying interest rates will rise, and so we now expect this to happen next Thursday. An interest rate rise strengthens a currency due to the higher return, and the comments have pushed GBP/EUR even lower this morning.
Should you buy Euros now or should you wait?
It’s always impossible to predict what will happen to exchange rates, however with poor UK data showing the economy is struggling it’s not likely the pound will strengthen in the coming weeks and months. Also with interest rates on the rise in the EU, and optimism following the Greek vote it could easily strengthen the Euro further.
To protect against possible drops in rates, you could consider fixing the rate for your Euros now with a Forward contract, even if you don’t need the currency for some time. Contact us today to find out more about how these contracts work.
Unemployment data from Germany today is the main release from the Eurozone. The UK has little data out today, however there is a credit conditions report from the BoE. This studies the risk attitude towards UK banks, and can indicate economic growth (or lack thereof!). We also have jobless figures from the USA and Gross Domestic Product from Canada.