How could Euro react to the Greek referendum?

Friday 3rd July 2015
Regular readers of my blog will be well aware that most moves in Sterling/Euro of late have been due to the ongoing problems in Greece. The failure to meet their debt payments and the ongoing negotiations have weakened the Euro significantly in the last few months, resulting in a cheap single currency. In fact the current GBP/EUR is very close to the best it’s been in 8 years. Below is a chart showing the exchange rate over the last 3 months. As you can see, it's risen to €1.40 several times before dropping back away again:

 

What’s happening this weekend? 

The Greek people are voting on a referendum called by the Greek government, on whether they support the bailout offer, in terms of further international loans. This follows months of tough talks with creditors. 

Currently all support to Greece has been stopped, and the banks are likely to run out of cash on Monday. You can read more about this here on the BBC website.  EU leaders have warned that a "No" vote could see Greece leave the Eurozone. 

What if Greece votes ‘No’? 

This would mean them rejecting the bailout plans, and the Euro could well weaken pushing Pound/Euro rates higher. Some say this would mean Greece leaving the Euro. Actually, there is currently no mechanism for them to do so, as it simply wasn’t envisaged when the Euro was created! Even if they decided to leave the Euro tomorrow, it would take months for the EU to work out how to do this in practice. A no vote though would mean back to square one, and negotiations would start again. I do think however that a No vote will keep Pound/Euro firmly above 1.40 and we could possibly see rates climb even higher. 

What if Greece votes ‘Yes’? 

This would be a blow to the Greek government. It would in no way resolve the problems, as all it would mean is that negotiations would start again. However, I think a Yes vote would strengthen the Euro, and pull GBP/EUR rates back below the 1.40 mark again. 

What does all this mean for Pound/Euro rates? 

This afternoon GBP/EUR has fallen as the latest polls suggest the Yes vote has a slight lead. This indicates that rates could tumble if the vote goes this way on Sunday. Personally, whichever way the vote goes on Sunday, I still firmly believe a deal will be done between Greece and its creditors, and when it does I would expect Sterling/Euro to drop sharply. 

It’s in everyone’s interest to do a deal especially Greece’s. If I needed Euros in 2015, I would give serious consideration to fixing a rate while it’s close to the best in 8 years. 

Do you need to get the best exchange rates? 

Regardless which currency you need to buy or sell, why not get in touch with me for a quotation, and to discuss the different tools I provide to protect you against adverse exchange rate movements. The rates I source are up to 5% better than banks and other brokers may offer, and it costs nothing to contact me for a free consultation and quote. 

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Have a great weekend.

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Pound/Euro hits €1.41 on Greek uncertainty

Tuesday 23rd June 2015 
Since my post yesterday, the Pound/Euro exchange rate has risen by over 2 cents, and at the time of writing sits at €1.41: 

The reasons for the gains is there is as yet no agreement over Greece, and no deal to decide whether Greece and its creditors can get past the political barriers in the way of sealing a resolution. 

Euro zone leaders did agree late last night that the institutions representing Greece's creditors should try to wrap up a detailed agreement by Wednesday evening for their finance ministers to approve and present to them on Thursday. 

So, while there us uncertainty, the Euro is weak. Nothing has really changed though – most still expect a last minute deal to be agreed, and if that happens, expect the rate to correct sharply. 

If you need to buy Euros, then consider getting something done while it’s still over €1.40. While nobody can predict which way the rate will go, each and every time we’ve got to these levels in the last 6 months, it hasn’t lasted long and the rate has dropped back away again. 

Click here to send me a free enquiry and find out what rate I can offer on your exchange.

How solution to Greek crisis could affect exchange rates

Monday 22nd June 2015 
This week, and today in particular, is quite a critical one for Greece, and the GBP/EUR exchange rate along with it. Many headlines are suggesting that this is the ‘Last Chance’ for Greece. There have been many of these before, and I don’t think today will provide a complete solution. 

What exactly is happening in Greece? 

They need to make a debt payment of €1.6 billion by next Tuesday, 30th June. However to be able to actually meet that payment, they need to get a further €7 billion in aid, and that’s what they’re trying to agree today, however to get the funds, the Greeks need to reform pensions and cut spending, which is difficult for their Prime Minister Alexis Tsipras to agree to, given he was elected on the premise of ending austerity. 

Early this morning, he met the leaders of the IMF, ECB and EU commission to outline his proposals. Just before lunch, the EU’s finance ministers started a meeting to see if they can agree on a deal to give Greece the bailout funds they need. Later this evening at 6pm all the EU leaders meet for an emergency summit to debate the crisis. 

How could Greece affect the GBP/EUR exchange rate? 

The uncertainty over Greece’s ability to obtain bailout funds has meant there is a risk of them leaving the Euro. This fear has been keeping the Euro weak, and that’s why the GBP/EUR exchange rate has been hovering around the €1.40 level of late. 

If they reach an agreement later today, or later this week, then I would expect the Euro to strengthen and cause the GBP/EUR rate to fall. However we’ve seen quite a few of these ‘last chances’ for Greece, and it could be that this weeks meetings simply kick the can down the road a little further, without actually sorting out the fundamental issues. If so, expect rates to remain supported. With worried Greeks currently withdrawing their savings from the banks in huge amounts, it's clear that a solution needs to be founds quickly. 

Personally I think they will all agree a way forwards sooner or later, which could mean the current GBP/EUR levels may not last for long. 

Are you looking to convert £5000+ on a bank to bank transfer basis, and keen on getting the best exchange rates? 

If you need to convert currency, and would like to get a quote to see how much I could save you on your exchange, then it is certainly worth sending me a free enquiry to obtain a quotation and more information on the services I offer. The rates I can achieve are significantly better than banks and other financial institutions offer, by as much as 5% in some cases. I also offer various types of contracts that can protect you against adverse exchange rate movements that banks don’t usually offer to private clients. 

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