After three days of intense discussions, Antonis Samaras was finally sworn in as Prime Minister of the new-look Greek coalition government yesterday. The New Democracy party eventually reached agreement with the Pasok and Democratic Left groups, and Samaras vowed: “With God’s help we will do everything we can to take the country out of the crisis”. Critics may argue that with a rapidly slowing economy, 24% unemployment and debt at 140% of GDP, the help of a higher power may be the only possible solution.
The first battle will be to seek an extension on austerity conditions for the country’s rescue loans – the current conditions require Greece to cut €11.5bn in public spending by the end of 2014. The new coalition will look to thrash out a deal which would see this deadline put off until 2016. After an initial bout of optimism the Euro has found little support – GBP/EUR is still hovering around 1.2350.
Over in the US, the Fed extended Operation Twist through until the end of the year. On the whole, markets were generally quite disappointed by what was viewed as a failure to launch a full-blown stimulus programme. However, a deteriorating jobs outlook means that further action, perhaps in the form of Quantitative Easing later in the year, still remains a very realistic possibility; this could see the USD weakening if this is considered.
Closer to home, the focus yesterday was on the minutes from this month’s Bank of England meeting. These showed a very tight 5-4 split in favour of having no more QE this month. The fine margin of this verdict, coupled with the general weakness of our economy at present, adds considerable weight to the argument that more QE is just around the corner – perhaps as early as July. Generally this will be seen as negative for GBP and will cause it to weaken.
Currency UK will offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.
Do you want to earn some extra money? Then you can profit from our affiliate program by referring a company or friend that may benefit from our services and earn a commission in return. Contact us now on +44 (0)20 7738 0777 or click here.