Foreign Exchange Report : GBP EUR Rate Threatens New 8-Month High, With Greek PM Papandreou Set to Announce His Resignation

7 Nov 2011 at 9 AM - Written by John Cameron

STORY LINK Foreign Exchange Report : GBP EUR Rate Threatens New 8-Month High, With Greek PM Papandreou Set to Announce His Resignation

The Pound Euro exchange rate (GBP EUR) is 1.1660. The Pound Dollar exchange rate (GBP USD) is 1.5993. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5534.

The recent political developments in Greece took another turn over the weekend, as current Prime Minister George Papandreou agreed to step down as leader of the troubled Hellenic state.

Politicians from all major political parties held prolonged talks over the last two days in an attempt to form a ‘unity’ coalition government, which is expected to lead the country into general elections in the early part of next year.

Today marks a sad day for Papandreou, who is the third generation of his family to hold Greece’s top political job. It is expected that a new Prime Minister will be announced later today, with Lukas Papademos, the former Deputy President of the ECB and current Finance Minister Evangelos Venizelos considered the leading candidates.

Although any plans for a popular referendum on Greece’s acceptance of the ECB/EU/IMF bail-out scheme have been shelved, Greece’s fiscal problems are very far from being resolved. The new coalition’s first task will be to accept the bail-out plan which was agreed by Eurozone leaders ten days ago. This will bring with it a deepening of the stringent austerity measures which have proved so unpopular with the Greek people in recent months.

The events in Greece of the past week, have if anything, increased the uncertainty regarding Greece’s ability to avoid default. If Greece does not agree to the terms of the Eurozone leader’s bail-out plan, then the country will not qualify for its next tranche of emergency funding and will be forced to default by the middle part of December.

Eventually, Greek politicians are going to have to face their electorate. Greek voters are likely to use this opportunity to vote for any political parties who are willing to stand up to Brussels. This weekend’s events may simply have delayed the inevitable in the country which invented democracy.

Asian stocks lost ground overnight and UK and European indices have followed suit in early trading today, suggesting that market participants remain nervous about the Greek situation. In the currency markets, the US Dollar has been supported on the day, while the GBP EUR rate broke to 1.1677 overnight as investors shifted their funds out of Europe’s single currency. The 8-month high of 1.1722 now looks within range for the pair.


For other live currency exchange rates and a currency converter see the currency news website.

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