Foreign Exchange Report : Global Stock Markets Rally Ahead of Crucial Greek Vote While GBP EUR Rate Drops Further

June 29, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Report : Global Stock Markets Rally Ahead of Crucial Greek Vote While GBP EUR Rate Drops Further

The Pound Euro exchange rate (GBP EUR) is 1.1131. The Pound Dollar exchange rate (GBP USD) is 1.5999. The Pound Australian Dollar exchange rate (GBP AUD) is 1.5141.

Global stock markets have registered significant gains over the last twenty-four hours in anticipation of a positive outcome in today’s vote on proposed austerity measures in Greece’s parliament.

The benchmark S&P 500 equities index gained 1.29% on yesterday’s session, while Tokyo’s Nikkei 225 closed up by 1.11% last night, signalling the market’s confidence that Greek policy-makers will vote in favour of the proposals.

However, a ‘yes’ vote later today will not necessarily mean an end to Greece’s debt woes, as Greek parliamentarians are required to vote again tomorrow, this time on the specifics of the proposed spending cuts, tax increases and widespread privatisation scheme. A negative outcome in this vote would push the Eurozone to the edge of the abyss.

Meanwhile, the Chief Executive of Italy's leading retail bank, Intesa Sanpaolo, Corrado Passera, yesterday stated his willingness to work together with Greece’s authorities to ease their debt burden, commenting that there was room for ’strong collaboration’ between the interested parties. These comments followed the announcement by French President Nicolas Sarkozy on Monday that French retail banks had agreed to extend the terms of their loans to Greece.

The market has initially reacted well to these statements, sending the GBP EUR rate to as low as 1.1129 in early trading today. However, with leading ratings agencies S&P and Fitch warning that they may view an easing of the terms of Greece’s loans as default, even if the action is taken voluntarily, the Euro remains prone to severe downside at a moment’s notice.


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