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Varoufakis Out of Greek Government: Analysts Forecast Greece will Remain in Euro Area EUR/GBP, EUR/USD Fluctuate

July 7, 2015 - Written by John Cameron

Euro (EUR) Gains as Greece Given More Time, EUR/GBP, EUR/USD Exchange Rates Higher



The Euro gained on the Pound and managed to hold its own against a bullish US Dollar as Greece was given until Sunday to present creditors with reform plans. The EUR/GBP pairing advanced over 0.6% on the day's opening levels.

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Euro to US Dollar (EUR/USD) Pound Sterling (EUR/GBP) Exchange Rates Affected by the News that Varoufakis is out of Greek Government



Sunday night’s news of a resounding victory for the ‘No’ campaign in the Greek referendum has claimed its first victim. Combative Finance Minister Yanis Varoufakis announced that he was resigning just hours after the referendum result and the shaven-headed Athens Moneyman was characteristically fiery in explaining his decision, stating that he will, ‘wear the creditors’ loathing with pride’.

Varoufakis expanded on the reasons behind his decision, explaining that he had been, ‘made aware of a certain preference by some eurogroup participants, and assorted partners, for my absence from its meetings’. However, other commentators took a different view on the situation, suggesting that the former FinMin had been ousted by Greek Prime Minister Alexis Tsipras following incendiary comments contained in an interview with a UK national newspaper. Varoufakis was reported to have stated that, ‘if necessary, we will issue parallel liquidity and California-style IOU's, in an electronic form. We should have done it a week ago.’ These incendiary words appear to have sealed the Greek policymaker’s fate.


Progress in Greek Negotiations Forecast to Drive GBP/EUR Exchange Rate Lower Today



His successor is likely to be Euclid Tsakalotos who has previously led Athens’ debt negotiations with the Brussels Group. Tsakalotos is considered to be a more emollient character than the firebrand Varoufakis and is more likely to gain concessions from the German delegation. However, the rumours of the likely promotion of the widely-respected economist were not enough to calm the tone of language emanating from Berlin today. The German Economy Minister Sigmar Gabriel led the way, warning Athens that if it wishes to remain in the euroland, it must present proposals which go beyond those which it has so far put forward.

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Foreign Exchange Predictions: GBP to EUR Exchange Rate Steady, EUR to USD Softer



The Pound Sterling Euro exchange rate has held steady on the day in spite of the turmoil in Greece, clipping an intraday high of 1.4147 GBP EUR during early trade yesterday before falling back to as low as 1.4041. The shared currency was helped by the morning publication of a better than anticipated whole of eurozone Sentix confidence survey which showed that, in spite of the parlous state of Greece’s public finances, European economic participants are taking a ‘glass half full’ view of the future.
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