Tentative signs of Greek agreement

Dollar and Euro Currency

Do we have an agreement in Greece? Noises yesterday suggested so although no clear announcement has been made. The rumours did cause a slight rally in risky assets yesterday but with all the macroeconomic data flying round from the UK, Bank of England and Mario Draghi, yesterday’s session was a very choppy one. The story was broken by the FT Athens correspondent that a deal between Greek politicians had been reached, however, it has not signed, ratified or confirmed in any way, shape or form. There are numerous hoops for this agreement to jump through before we can say “Deal Done”.

Firstly, the deal has to be voted on by the Greek parliament this Sunday. Some commentators have brushed this off as a mere formality but, following further labour strikes from Greece’s two largest unions and the resignation of the country’s labour minister, the debate within the chamber will not be tepid to say the least. Further protests in Syntagma square can also be expected.

Secondly, and like a naughty schoolchild, the IMF is now requiring Greece to provide written proof that the EUR300m-odd hole in the new austerity package is tied up. Talks originally broke down over whether this should come from public sector pension pots; defence spending has been mooted as a place where these cost savings could be found.

Lastly, the deal is all predicated that these reforms are enacted. There is a Greek general election in April, bringing an end to the 6 month technocratic rule of Lucas Papademos. Should he leave and the new government renege on the deal, we are back to square one. The troika will put up there side of the bargain, it is up to the new leaders of Greece to keep up theirs.

As you can see, the entire situation is a mess and I am still unable to name a person, outside of the European political class, who believe this will work in the long term. Greece’s future remains outside of the euro in my opinion.

Matters closer to home were far simpler yesterday. The Bank of England matched the analyst expectation with a £50bn injection of further QE yesterday and warned that they expect a “significant shortfall” in the UK economy to persist. Those of you who took part in our webinar yesterday will know that we now expect a further jump in May of between £50-75bn. That being said, sterling rallied yesterday and gilt yields fell although the moves were entirely within the pre-determined ranges. Sterling had earlier picked up on news that our trade gap, the difference between our imports and exports had narrowed to the lowest level since 2003, while manufacturing output had risen by 1% in December against an estimate of 0.2%. The imposition of further QE has moved the interest rate expectation curve so that the market now doesn’t expect a rate hike in the UK until 2016!

Draghi’s press conference held little surprise although there were some language changes that may have caused some to rethink their expectations of a rate cut next month from the ECB. The Bank reiterated that “downside risks” to the Eurozone remained although that these were no longer “significant”. They also stated that inflation was “broadly balanced” and that there had been no discussion of a rate cut at this month’s meeting. The curve for rate cuts has shifted a tad but most people expect 50bps cut in March still.

Overnight Chinese import data has disappointed, making sure that European equities start the day in the red. Industrial production figures from France have also disappointed this morning following horrific figures from Greece earlier in the week. Today smells like a day during which risk will fall, so those looking to buy GBPUSD may want to get short-term needs filled quickly.

Eyes today will remain on Europe but the data calendar gives us UK PPI at 09.30, US trade balance at 13.30 and consumer confidence at 14.55.

Indicative Rates Sell Buy
GBPEUR 1.1904 1.1932
GBPUSD 1.5797 1.5822
EURUSD 1.3253 1.3278
GBPJPY 122.52 122.81
GBPAUD 1.4773 1.4800
GBPNZD 1.9060 1.9089
GBPCAD 1.5773 1.5802
NZDUSD 0.8281 0.8302
GBPZAR 12.09 12.14
USDZAR 7.6432 7.6800
GBPPLN 5.0003 5.0309
EURJPY 102.77 103.05

Rates are dependent on amount transacted. Please call for a live rate quote

Company Details

Tentative signs of Greek agreement

Get a quick quote

Open Account with Currencies Direct

Currencies Direct are located at:
51 Moorgate,, Greater London,, , EC2 R6BH, United Kingdom

Get a Quick Quote

Newsletter Signup to CMT

Sign up to our foreign exchange newsletter to receive news updates directly by email

Compare Money Transfer will not Share your details!

Bank Exchange Rates Comparison

High St Bank Exchange Rate

All Rights Reserved: Copyright 2006 - 2018 Compare Money Transfer Limited offering FCA Regulated Suppliers - 34 New House, 67-68 Hatton Garden, London, EC1N 8JY. +44 (0) 843 357 4882