Today the GBPEUR rate hasclimbed over 1.25 for the first time in nearly 4 years. This is after thenews that the Greek Government walked away from talks aimed at forming a coalition Government for the third time in as many days. They now have a number of days left to form a Government before another general election will be called. This election many experts are thinking will give the power to the people as to whether they stay in the euro or not, and could theoretically bring down the euro state. It is this level of uncertainty that has resulted in both the euro being sold off and risk appetite being lost by investors.
Why is that important?
Well investors risk appetite has a massive effect on currencies with a large interest rate and there are many. The ZAR, AUD, NZD to name a few. Investors put money into these currencies to earn well of the interest earned when their risk appetite is high, when not the money is pulled back and this European story is as big as it comes. Money has been flying back with a dramatic change to currency rates as we have been mentioning for the last few days. I personally would expect this uncertainty to continue with rates continuing to climb for most positions selling GBP other than the USD. The Europeans next crunch meeting is the 24th and should be one for everyone with a currency transfer to be aware of.
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