Greece in round two of legislation pushes
All day yesterday, the GBPEUR stayed almost level through the course of trading – moving only 0.2% either up or down from where the markets opened to where they closed. While this is welcome respite from the volatility we have observed in recent weeks, it does pose questions about the path of the currency pair from here.
The GBPUSD on the other hand was a bit more erratic, with more peaks and troughs during yesterday’s exchange. Ultimately the GBP lost ground against the Greenback as several fundamental factors continue to gather steam that support the US economy – such as interest rate potential moves and their economic data production.
The Greek government has officially applied yesterday for changes to law that were ordained under the criteria for the bailout funding to bridge their debt payments. Part of this legislation change simply moves Greece in line with recent European Union rules on what to do when banks fail. It means that the onus of failing bank debt lies first with shareholders and creditors before any public money may be used to save them. The underlying tensions between Greek Prime Minister, Alexis Tsipras, and his own party continue to ferment as he is attempting to make further changes to the law in order to push through funding, having already revealed the details of the bailout plan, and then sought to pass laws to align with the criteria imposed.
It appears that after the initial clamour to celebrate Bank of England Governor Mark Carney’s comments regarding interest rate change, many economists now believe the celebrations may have been premature. The details of a recent poll among economists suggests that an interest rate rise is seen by many as something to possibly expect, at the earliest, in 2016. Further, many are aware that Carney has previously issued hawkish statements only to rescind them shortly afterwards. There is also confusion about the justification of such a rise for the UK economy at this time or even into early 2016.
Again today, we have a quieter economic data scene. This morning the Reserve Bank of Australia’s minutes were focused on Treasurer, Joe Hockey’s, small business support scheme. The scheme drew wide criticism when it was announced and now the results are showing a frustrating lack of impact for those it meant to support. Later today, look for UK Public Sector Net Borrowing, forecast to have lowered by a healthy chunk from the previous reading. Apart from this, the news cupboards are bare today.