Global Markets Brace Themselves For Latest Greek D-Day As Pound To Euro Rate Holds Steady

Published: Thursday, 8 March 2012 09:00 BST - Written by James Fuller

STORY LINK Global Markets Brace Themselves For Latest Greek D-Day As Pound To Euro Rate Holds Steady

The Sterling To Euro Exchange Rate is 1.1976.

The clock is ticking as Greece’s latest hour of judgement rapidly approaches. Over 75% of the debt-addled Hellenic state’s creditors need to sign up to the proposed debt swap deal by 2000hrs GMT tonight, otherwise a disastrous and disorderly Greek default is unavoidable.

As of close of business in Europe last night, almost 40% of the institutional investors holding Greek bonds had signed up for the scheme. If the markets are anything to go by, then Greece will succeed in getting three-quarters of these investors signed up before tonight – European equities markets showed respectable gains during yesterday’s session, following their heavy losses of Tuesday. This suggests a decent level of confidence that Greece will prevail tonight – however, it’s not a done deal until the deal is done.

Meanwhile, today sees monetary policy decisions from three leading global central banks, as the European Central Bank, the Bank of England and the Bank of Canada all make their rate announcements for the month. The likelihood is that all three will maintain rates at 1.00%, 0.50% and 1.00% respectively, however, the main interest for investors will be in whether the UK’s central bank will elect to increase the £325bn currently allocated to its asset purchase scheme. There appears to be a live outside chance of this following the dovish tone of the last set of MPC minutes.

Elsewhere, this morning’s German Industrial Production figures will be particularly closely-scrutinised, following yesterday’s highly disappointing German Factory Orders data for January, which showed a surprise monthly contraction of 2.7%. If the numbers provide further confirmation that the German economic miracle is showing signs of evaporating, then the euro is sure to come under considerable selling pressure.

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