Sooooooo, let me get this straight. After six years of Greece being in the news and Monday being called last chance saloon (again) after 5 months of little progress between Tsipras (Greek PM) and Europe what has been agreed is this –
· Greece have another few days
· The Greek Government is finally getting serious – About time one would think.
· Reforms submitted are starting to converge with what European creditors have been asking for
· Potential sign off end of this week
· Any agreement still needs to be ratified by the Greek Parliament and Germany insisting economic policy is passed in Greece prior to the German Lower House of Parliament agreeing to a revised aid deal.
In summary - We’re a little further along but still a million miles off from any solid agreement. The question still remains – Will Greece agree a deal or not? Who knows is the same answer as it has been for a long time. Let’s check back again on Monday.
What has the last couple of days done for the Euro? It has weakened the single currency. If you are a Euro buyer from GBP I would look at covering off some of your exposure at these levels. Why? Because I think some sort of deal will be cobbled together and the Euro will strengthen end of week/beginning of next. If you have end of month requirements I would look at these levels as being attractive on GBP/EUR. However, medium term, once the dust settles everyone will sit back and say “Hold on a minute, we’ve not made much progress, Greece is about as solid as melting chocolate and uncertainty still remains, let’s dump the Euro”. I think we’ll be in for further Euro weakness in August and I think we’ll see EUR/USD push back below 1.10 and this may give GBP/EUR a bump up. EUR/USD may even be called back to 1.05 in the next few months. Some will say parity but I doubt that very much.
With all the uncertainty this week (No-one can predict what might happen on Greece and the impact on the Euro) the best course of action is to contact myself or one of the trading team to discuss your individual requirements and we can put a strategy in place for the short and medium term to mitigate sharp movements in either direction.
Any questions in the interim please let me know.