Tuesday, 16 June 2015

Tuesday, 16 June 2015

The IMF walk out on Greece

Last week was a fairly busy week on the currency markets with a host of data and talk moving the markets.

GBP/EUR rates moved 2.5%, hitting a high of 1.3889 with a week low of 1.3540. GBP/USD rates were also on the move with a high of 1.5541, climbing from the low of 1.5230, a 2% movement.

Greece has been dominating the headlines recently and for good reason. The debt stricken country are pushing for a deal with their creditors to release more funds but time is running out for this deal to be struck.

Greece must pay back the International Monetary Fund (IMF) €1.6 billion by the end of this month and without this deal there is no possibility of that happening.

They are trying to strike a deal for their creditors to release the final €7.2 billion of their bailout, without this Greece could default on its existing €320 billion debt and face bankruptcy and even the much talked about Grexit.

The IMF dramatically walked out of talks with Greece last Thursday, accusing them of failing to compromise over labour market and pension reforms.

It seems that Greece will not budge on their demands and are playing a very dangerous game. IMF spokesman Gerry Rice said “The ball is very much in Greece’s court. There are major differences between us in most key areas. There has been no progress in narrowing these differences recently.”

If Greece don’t strike a deal with their creditors then expect the euro to plummet. We have seen many times recently that any hint of Greece defaulting or talk that they are struggling to find enough funds has had a very negative effect on the euro.

On the flipside I can’t imagine that anyone will want Greece to exit the euro and this deal will end up being in everyone’s best interests. So if they can come to an agreement we should see the euro gain some much needed strength.

With the deadline fast approaching and no progress being made at present expect a bumpy ride for the euro for the remainder of this month.

Guest writer :
Adam Bobroff, Director http://www.foremostcurrencygroup.co.uk

Tel +44 (0) 1442 892060

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