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While the spotlight is on Europe the GBP/USD breaks through the level of 1.60

While the spotlight is on Europe the GBP/USD breaks through the level of 1.60

The hope had been that today’s meeting of Euro Zone leaders would be the catalyst for finding a solution to the Euro’s woes. However, a resolution is looking increasingly unlikely after the meeting of European Finance ministers before this evening’s summit, which was scheduled for last night, was cancelled.

In Italy, it is starting to look as if the crisis may claim another victim in Silvio Berlusconi – according to reports, his coalition government is close to breaking up. It is understood that the area of disagreement between the two halves of the coalition rest upon the key plan to raise Italy’s pension age from 65 to 67.

Meanwhile, in Berlin, Angela Merkel said Germany opposed a phrase in the summit’s draft conclusions urging the ECB to go on buying troubled states bonds – which has been the key to stopping the crisis spreading to Italy and Spain. It is believed that the ECB could ultimately be the one institution with the power to halt the debt crisis, so any removal of their powers will be met with risk aversion.

It is expected that after this evenings meeting, the communication will announce bank re-capitalisation, the leveraging of the EFSF and news that private bond holders will need to take a hair cut on their debt. Unfortunately, the exact details on the size of the bank recapitalisation, the method for leveraging the EFSF and the size of the hair cut on private debt are likely to be missing from the communication.

Even without an official plan on the board from the ECB, the chancellor of the Bank of England, Sir Mervin King, has warned that the measures discussed are likely to merely buy some extra time for the single currency – perhaps one or two years. The problem with the planned announcements is that they fail to address the central problems of the Euro – that it creates a huge divergence in trade and growth between euro countries, which have no fiscal powers to shift exchange rate to even this out.

What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.

Currency UK will then offer you the best exchange rates available and ensure that you subsequent international transfers are handled as quickly and as efficiently as possible.

Contact us now on +44 (0)20 7738 0777 or click here.

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