Foreign Exchange News
22 June 2015

Greek Drama to Have Fairy Tale Ending?

EUR/USD 1.1330
GBP/USD 1.5857
GBP/EUR 1.4001 (0.7143)
EUR/CHF 1.0429
GBP/CHF 1.4600
GBP/AUD 2.0410

We start the week off on a familiar topic that has been a recurring theme for the past five years. Yes, we are here again this morning in what has been labelled as the last chance saloon for Greece. Yet again this morning Greece and its creditors are scheduled to meet, where Greek Prime Minister Alexis Tsipras is to present new proposals to European leaders aimed at ending the country’s debt crisis. While Tsipras has remained defiant on resisting demands to cut pensions, many believe he’ll look to appease lenders with other considerations, but whether this will be enough is another day’s work. However there is a sense of optimism in the air this time round and it’s not just coming from the Greek side, with European Commission spokesman Martin Selmayr tweeting that the new offer “was a good basis for progress”.

All of this uncertainty has resulted in significant declines for European stock markets over the past couple of weeks. However this newly revised optimism has seen the euro strengthen this morning in Asian trading hours, while European equity futures are also higher. We have seen the euro already testing and breaking the 1.14 level against the dollar this morning and had been inching closer to the one-month high of the USD 1.1440 it hit on Thursday. In the past hour however we are back to levels closer to the 1.13 level.

One would be forgiven in thinking that this strength in the single currency is premature, as how often have we been in this position before. While it is positive that we are seeing a new apparent willingness from the Greek Prime Minister, it shouldn’t be forgotten that submitting a proposal is one thing, having it accepted by the creditors is another. While I continue to sit on the fence here, one thing for certain is that we will have some sort of clarity on this outcome by the end of the week. Whatever happens between now and then, it will certainly be all about the euro today.

Away from the Eurozone, we don’t have much else out today with Home Sales from the US the only other release of note out. While Home Sales have disappointed in the past, missing all but one of analysts’ expectations this year, today’s figure is predicted to deliver its highest number of the year. If we see anything close to the 5.28m expected, then we may see some further optimism in the US’s economy. It is a very quiet week for the pound with no significant data due out, as a result it will look to be driven by its peers.

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