Greek talks collapsed on Sunday. Surprising? My reaction is about as shocked if someone told me it gets hot in Africa from time to time.
What are the next steps in the soap opera of Greece and the Eurozone? The ‘make or break’ date has now been moved to June 18th in Luxembourg when the Euro Area Finance Ministers get together for the Eurogroup meeting. Bets on an agreement being reached this Thursday? I’d rather bet on a one legged horse winning the Grand National. I’d expect some statement to come out saying ‘they’re getting closer’ and we’ll bumble along until July, if Greece has the finances to do so. That’s a big if. Greece owe around 3.5 billion Euro’s in redemptions on bonds held by the ECB in July and will need to make that payment along with keeping the country afloat. Will there be a Grexit or not? Who knows is the honest answer. Are the chances increasing of them leaving? I would have to say yes.
Will Greece exit or not is the question that is/will shift the Euro in the coming days and weeks. What would happen to your exposure if the Euro strengthened or weakened 5%? Do you have a strategy in place to mitigate this risk? If you are a Euro buyer I would implement orders to the upside so you can take advantage should Greece’s gamble prove to be ill judged and the Euro weakens. I would also consider covering off some of your exposure on a SPOT basis. Always consider where GBP/EUR has been historically over the past 5 or so years and you quickly realise you’re in a very strong position. Please contact myself or one of the trading team and we’ll discuss appropriate levels to aim for. Think it’ll go 1.39/1.40? Have something in place to take advantage of the move.
Range this week
· 1.37 – 1.40
GBP/EUR is fairly range bound at the moment and rather dull. It is stuck trading from 1.37 – 1.40 with no bias in either direction for now. I would say GBP/EUR will drift gradually higher, may challenge 1.40 the figure again, get confused, and then drift lower.
Euro seller? Place orders to the downside. I would suggest levels of 1.37 short term with a view to 1.35 medium term then below. Send me a quick email and we’ll discuss your individual requirements
We have the Fed Policy Statement released on Wednesday and I think this will give the dollar a shot in the arm. Higher rates in September are still likely so I do believe we’ll be in for another round of Dollar strength this year. GBP/USD has shifted higher in recent trade.
Range this week
· 1.54 – 1.57
If you are a USD buyer I would look at covering off some of your exposure with a mixture of SPOT and Market orders. Please contact me to discuss percentages of your exposure to implement. We have CPI figures out of the UK tomorrow so this may come in above expectations and give Cable a shift slightly higher. However, I would caution getting too excited about GBP/USD pushing much higher as I still remain bearish and think we’ll come off after our recent flirt and move to the upside.
Have a fantastic week and if we can be of any assistance please do get in touch.
Written by Liam Alexander