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Has British Pound Sterling Euro Exchange Rate Reached Near Term Peak at 1.4173 GBP EUR?

May 27, 2015 - Written by John Cameron

This afternoon’s session has seen the euro (currency:EUR) launch a concerted comeback against the both the Pound Sterling and the US Dollar (currency:USD) as rumours spread across the market regarding a Greek debt deal.

Unconfirmed reports suggest that the debt-addled Hellenic nation’s negotiators have reached a ‘staff level agreement’ with her creditors regarding internal reforms. If these market rumours are correct, then Greece will be granted the funding it desperately requires in order to meet the €1bn+ worth of debt commitments due to the International Monetary Fund (IMF) over the next month.

The Sterling euro exchange rate was changing hands in the upper part of the 1.4100s during early trading today, but by the European close, the pair was tipping the scales at relatively lowly 1.4058. However, investors looking to buy the euro in the near-term were provided with one chink of light at the end of the tunnel; an unnamed source in the Greek camp suggested that, ‘if the agreement of the IMF was not required, we now have closed the deal.’ The suggestion that only two parts of the triple-headed EU / ECB / IMF Troika were satisfied with Greece’s proposals raises the potential that an agreement will not be reached. Such an outcome would be near-certain to propel the GBP EUR exchange rate up to a fresh 7 ½ high above its existing near-term peak of 1.4257.

Peter Boockvar, of The Lindsey Group, commented earlier that, ‘the deadline we know is fast approaching and the assumption will be another can-kick deal. If there is none and Greece defaults, I honestly don't know what the full repercussions will be at this point, as Greece is a political problem, not an economic one for the euro region.’ In spite of Boockvar’s doubts, most analysts are now putting forward negative forecasts for the near-term performance of GBP EUR.

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