As predicted by GBPEUR forecast Spain confirmed over the weekend the they would need a bailout for their financial sector. This was accepted by the Europeans and a credit line was given up to €100 billion, we will not know for another week how much of this will be needed to “resolve” the Spanish banking system. Following this news the euro strengthened in early trading but once the markets understood the volumes involved where not final uncertainty returned and the euro weakened. I am still of the opinion that the way they have gone about this over the last few weeks has been awful however it seems the markets are happy with the news, maybe they see any step forward as a good thing.
The next date for everyone with a currency transfer is the Greek election taking place over this coming weekend. Even though it is no financial benefit for Greece leaving the Eurozone this could easily be the case in a matter of days. It would be an unprecedented event that the markets have not seen before so there is no clear prediction on how the markets will react. It could be that the markets see it as Europe cutting off the illness and the euro strengthens, or could easily been seen as a massive financial loss with all the money that has gone to them being written off, and as a result the euro falls. I personally am unsure what would happen if Greece left the euro. Either way it looks like GBPEUR is shaping up for a turbulent week and there is no 1 solution out there. As a result anyone with a currency transfer should review their personal situation before hand this week. Each of you will have different scales, volumes and appetite for risk and we normally look at each situation separately to create a personal strategy to try and maximise your exchange.
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Other than policies events there are a number of economic events taking place this week. Please review the below events before your trade:
UK Industrial & manufacturing Productivity – 2nd degree – Expected to strengthen GBP
German Consumer price index – 2nd degree – Expected to weaken the Euro
European Productivity – 2nd degree – Expected to weaken the euro
European Central Bank Monthly Report – unknown and could easily be significant for the future of the worlds second currency
European Consumer Price Index – 1st degree – Expected to weaken the euro