D-Day For Greece
We seem to have been here before but this week really is incredibly significant for the future of Greece and the Eurozone. The 30th June deadline for repayment of the IMF loan is getting ever closer and today an emergency session of EU leaders is being held in Brussels to discuss the state of Greek finances. Have we finally come to make-or-break time? Possibly…
The need for an immediate resolution is now coming from the Greek Banks as opposed to the need to settle a repayment plan. If the ECB cuts off Greek Banks then they will simply run out of money and be forced to close until they work out how to stop people taking out all their money. Last week alone saw €4bn being withdrawn compared to the normal €1-1.5bn.
On the plus side there are rumours that both sides are a bit more open to negotiation as Greek PM Tsipras put forward new proposals on Sunday, so at least there is a starting point. Early rumours are that these are linked to VAT and retirement age. Whatever happens, neither side looks likely to be the “winner” as the Greeks are under public pressure to remain firm and Angela Merkel is under pressure not to bow to Greek demands.
All eyes will be on Greece and we should see a huge amount of volatility in the markets today so beware!
Sterling has been the best performing currency in the previous month boosted by strong inflation and wage growth data. In the US, we are seeing a return to its safe haven status and the acknowledgement that the US economy can now support a 0.25% rate hike.