Best GBP/EUR Exchange Rate in Years

March 10, 2015 - Written by John Cameron

STORY LINK Best GBP/EUR Exchange Rate in Years

It was never going to stay quiet for long – yesterday afternoon’s session saw tensions between Greece and the eurogroup hot up once more and the Pound Sterling euro exchange rate sprang to its highest level since 2007 as a result.

Jeroen Dijsselbloem, the head of the eurogroup of Finance Ministers, emphatically stated that the delegation from Athens should ‘stop wasting time’ and went on to assert that there had been virtually no progress in the two week long talks aimed at drawing up detailed loan conditions which need to be presented in order for Greece to attain fresh loans from her creditors.

The incendiary comments from Dijsselbloem followed a weekend statement from new Greek Prime Minister Alexis Tsipras encouraging his nation’s Finance Minister Yanis Varoufakis to employ, ‘fewer words and more action’ in his dealings with Brussels. Meanwhile, Varoufakis’ suggestion earlier yesterday that his country might hold a referendum on whether to continue with its adventures in the euroland had also served to spook investors holding the single currency. The Pound Sterling euro exchange rate spiked to a new 7 ½ year peak of 1.3942 as a consequence of these tit-for-tat comments; further losses are forecast for the pair.

Elsewhere, the Pound fared well against the euro, but its struggled to assert itself against the other major global currencies, following the publication of a parliamentary report which suggested that the UK Treasury remains unprepared for a financial crisis akin to the one which the domestic economy endured in 2008. The report alluded to unexpected financial shocks and events, deeming them ‘black swans’ and observing that, with regard to these unwanted avians,

‘all the evidence is that the preparation in Whitehall is not sufficiently connected: most of the key problems faced by Governments are horizontal and most government responses are vertical.’

In short, a repeat of the 2008 credit crisis, which almost lead domestic retail banks to the point where they could not stock their cash machines, or open their doors, is perfectly possible. Analysts forecast that such a finding from a keynote Westminster report, could suppress support for Sterling into the medium term.

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