Greece?s Pro-Bailout Election Result Proves Negative For Pound To Euro Exchange Rate

Published: Monday, 18 June 2012 09:00 BST - Written by John Cameron

STORY LINK Greece?s Pro-Bailout Election Result Proves Negative For Pound To Euro Exchange Rate

Early indications from Greece’s General Election held yesterday, are that the pro-bailout ‘New Democracy’ party, led by Antonis Samaras, have secured over 30% of the popular vote, making them the best-supported party. Significantly, New Democracy will garner 50 ‘bonus seats’ in any new parliament by dint of the fact that they enjoyed the largest share of the vote. Although the ultra left wing anti-bailout Syriza bloc put up a strong showing to secure over 25% of the ballots cast, it now looks almost inevitable that a ruling ‘pro-bailout’ coalition will come into being, thanks to the fact that Greece’s other major pro-bailout party, Pasok, managed to gain over thirty seats.

Antonis Samaras stated his desire to rapidly form a government, within two hours of the polls closing yesterday evening. It would appear, barring any unforeseen circumstances or unreasonable demands from Pasok’s leadership, that affirmed technocrat Samaras will become the country’s new leader in the next few days. This is a development which is bound to go down well with the leaders of the other sixteen eurozone states, as it will allow a disorderly debt default to be avoided in the debt-addled Hellenic country.

The weekend’s events in Greece are likely to spell one thing for the GBP EUR exchange rate – further downside. The pair has been showing signs that it is trending downwards following its break to a multi-year high of 1.2578 in the middle part of last month, with subsequent highs getting lower and lows getting lower as well. Yesterday’s game-changing election result saw the pair re-open at 1.2376 at the start of last night’s Asian session. This was significantly below Friday’s market close at 1.2432.lookout for further movement lower during today’s session, particularly if Samaras succeeds in his stated aim of rapidly forming a new ruling coalition.

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