GBP/EUR 1.40? Really?
Today in 1876 Alexander Graham Bell made the world’s first phone call – Greece may well be making their last before the phone lines get cut off due to unpaid bills. As tenuous as the link between Graham Bell and Greece is, the point is that no one knows when Greece will actually run out of money…and what will happen when they do.
The Eurogroup (the finance ministers of the Eurozone) have said that Greece will not receive any further bailout money until the precise state of Greece’s finances is clear. They have also agreed to the start of ‘technical talks’ on Wednesday. Eurogroup president Jeroen Dijsselbloem warned that the last two weeks have been “a complete waste of time” and said, “We agreed today that there is no further time to lose. Discussions between the Greek government and the institutions will start on Wednesday in Brussels […] in parallel, technical teams from the institutions will be welcomed in Athens.” If they are only starting work on Wednesday, it really does beg the question: what on earth have they being doing up until now?
With this squeeze on the time frame of talks and action, the Euro has been driven to new lows, with GBP/EUR now trading well above 1.3950. The Euro is now at a 12-year-low versus the US Dollar with EUR/USD below 1.0800.
Outside of the Greek conversation: Overnight Chinese data was mixed and not significant enough to impact the continued strength of USD. A light day on the economic calendar but several BoE members will speak. BoE‘s governor Carney will testify before a House of Lords economic affairs committee. The market will be looking for hints on the rate tightening schedule.