Daily Archives: May 28, 2012
1.25 on GBP/EUR as Potential Greek exit Leaves Markets Anxious
Monday has seen GBP/EUR move back through 1.25, as the uncertainty surrounding the possibility of a Greek exit from the EU weighs heavily on investor’s minds. The markets did seem to be waiting for the Greek elections, before the next decisive move was made but with Europe’s woes continuing and seemingly unrelenting, the single currency may struggle to make up much ground in the short-term.
The negativity surrounding Europe is continuing to increase and for the first time publically, a major market segment has admitted putting contingency plans in place for the break-up of the euro. The chief executive of global insurance market Lloyds of London, has expressed his concerns and said they are now ‘preparing for that eventuality’ and would settle claims using multiple currencies.
This news is hardly likely to fill investors with confidence and at time of writing GBP/EUR had settled above 1.25, a level many analysts felt would provide resistance in the build-up to the Greek parliamentary elections in June. Personally, I feel a move towards 1.26 in the coming days is a possibility, as the uncertainty surrounding Greece continues to weigh heavily on the region.
If Greece were to exit the euro the results could initially be catastrophic for their economy and for the short-term fate of the single currency. The uncertainty that is surrounding the markets now will only increase and we could see euro weakness as investors run for cover. Personally I feel EU leaders will do everything in their power to keep Greece from defaulting, as it would set a dangerous president and the risk of contagion throughout the rest of Europe could be devastating.
If you would like to be kept up to date with all the latest market movements or have an upcoming currency requirement you would like to discuss, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
Greek elections will be the talking point for the coming week or so… and it is indeed tight! GBP USD AUD EUR NZD ZAR
Those with an upcoming currency interest may wish to keep a close eye on polls leading up to the elections, over the weekend it appears that the New Democracy party is just edging things as it stands, however I expect to see this shift numerous times in the lead up to the elections and I expect the markets to be very jittery in the next few weeks as well.
Whenever the Anti Austrerity party sticks their neck in front I would not be surprised to see the riskier currencies such as the AUD, NZD and ZAR become a little cheaper to buy and I would imagine the Dollar should strengthen too as it tends to when there are global concerns and slowing attitude to risk.
Should the New Democracy party look like they may potentially win then we may see quite the opposite, along with a little strength for the Euro.
Personally, if you have transfers to carry out I don’t feel this is a market to mess around with unless you are a serious gambler as absolutely anything can happen… Friday nights tend to be the big negative release time for Europe and you could have a weekend spoilt very easily should you be looking to sell Euros and another Spanish bank announcement comes in while the markets are closed and there is nothing you can do about it.
Regarding the Australian Dollar – The RBA Governor Stevens has mentioned overnight that we will more than likely see further rate cuts and that the Chinese slowdown is concern, however the rate cuts appear to already be priced in and it will take a while for China to really start to affect the AUD too badly. Feel free to take a look at one of our sister sites www.australiandollarforecast.com if you have a keen interest in the AUD as this is regularly updated purely with a focus on the Australian Dollar.
If you have a transfer to make and want to get the very best level of exchange (potentially saving £1000s) then feel free to contact me directly by emailing me djw@currencies.co.uk and I will not only assist you in rates but also with a very high level of customer service too, if you already use a broker then why not take 2 minutes to get a comparison just to ensure you really are getting the best deal.
