Will the EU accept Greece’s Bailout Plan? (Daniel Johnson)

GBPCHF Exchange Rates Reach Highest Levels Since Mid-March

Greece’s Syriza-led government are presenting their first solid proposal to renegotiate their debt with the EU.  They are proposing a bridge agreement that will enable Greece to avoid defaulting until they can agree a new four year reform plan with the EU.

A Finance ministry source has said the proposal will put forward the following conditions. Greece would like to wipe out 30% of its debt and commit to paying back the remaining 70%. They are also requesting Bond swaps to reduce the insurmountable amount of debt.  On top of these rather hopeful requests Greece would like to reduce the primary budget surplus target for 2015 to 1.49% of GDP, instead of 3% expected from its creditors.

A swift conclusion to Greece’s woes is unlikely  as the majority of the the EU finance ministers will not compromise on Greece’s debt. The uncertainty in the Eurozone has caused GBP/EUR to break through the elusive 1.35 mark and hit a Seven year high. Thus, proving to be an excellent time for Euro buyers. The question is, how long will Sterling’s gain continue? With the BOE’s inflation report due tomorrow many analysts are expecting a slight weakening for the pound. However, the market moves on rumour as opposed to fact and I believe much of the UK’s drop in inflation has already been factored into the rates. I feel the major cause for the drop in inflation is Oil prices and not down to a significant drop in consumer spending.

If you would like to get in touch to discuss these matters further, feel free to get in touch with at [email protected] or feel free to call on 01494 787 478 and ask for Daniel Johnson.