For anyone with a Euro requirement, the recent saga in Greece has caused much uncertainty and left Euro buyers not knowing which way to turn. Yesterday the Greek parliament had a key vote to push through severe austerity legislation to ensure that bailout funds from the EU/IMF keep the economy from collapse.
A close 155-138 vote was crucial not only for Europe but also for “the stability of the world economy,” said European Union President Herman Van Rompuy.
A second vote will happen today aimed at reforming laws to allow the package to be implemented. If approved, European Finance ministers will then meet on July 3 to approve the next bailout tranche and discuss options to ensure continued financing for the country.
Tens of thousands of Greeks have been taking to the streets since early on Tuesday with 48 hours of strikes by 80% of the population. This as a mark of protest against what they see as unreasonable demands from the EU and IMF with huge austerity cuts.
I believe that if the politicians had not approved the bill, Greece would have been pushed to the brink of defaulting on its debts and the country would have gone down the pan. But even though the government has won backing for its plan, the nation’s problems seem to be far from over.
From the currency perspective the pound bounced back from an 8 week low against the single currency in what was a very volatile day for word markets and today will surely be the same.
For those of you hoping that the issues in Greece would dent the impressive flight the Euro has taken, I think you may have further disappointment around the corner. There have been strong rumours that the ECB will raise interest rates again next month and when this occurred at the beginning of April the pound lost 3 cents over the course of a week. If you couple this with recent weak UK economic data I think the pound will weaken further and levels of 1.08/1.09 are just around the corner.