After strong European data to start the week yesterday the Euro regained some lost ground this morning returning the GBP/EUR rate into the 1.15’s. German data has indicated some of the strongest readings since July 2011 and performance for the rest of the year is expected to be positive.
The rest of the week is quiet for the Eurozone with little data being released. However UK GDP will be released tomorrow and there could be significant market movement if the UK inflation level takes a major jump.
Greek Bailout Talk trouble
Talks to help Greece meet the €7.3bn bill due in July have stalled with Euro ministers unable to reach an agreement with the International Monetary Fund. Greece needs to pay for maturing debts by borrowing further funds, which in principle suggests where the issue lies. Currently the IMF are taking the stance that some of the Greek debt should be written off in order for the repayments to be significantly lower. However unsurprisingly the creditors are not so convinced that’s a good idea.
The last time the Greece crisis got within a day of making the payments the GBP/EUR rate was above the 1.40 level. Whilst the EU are likely to keep this problem under the carpet with more money being wasted, I don’t think a crisis is on the cards. However considering the Greek government have already agreed to raise taxes and raid pensions. The severity of this austerity is clear, a lawyer earning €100,000 a year now receives €20,000.