Athens Debt Rollover Rumours Forecast to Send Pound Sterling Euro Exchange Rate Sharply Lower GBP EUR

Modified: Tuesday, 9 June 2015 10:45 BST - Written by John Cameron

STORY LINK Athens Debt Rollover Rumours Forecast to Send Pound Sterling Euro Exchange Rate Sharply Lower GBP EUR

The Pound Sterling euro exchange rate posted a dramatic reversal during yesterday’s trading day. The pair had been trading up into the higher part of the 1.3700s during the early part of yesterday’s morning session as investors continued to price-in comments from Greece’s hard line left wing Prime Minister Alexis Tsipras during the latter stages of last week. The Athens supremo described the euorgroup’s latest proposal for extricating his nation from its ongoing debt peril as ‘absurd’ and market participants shifted wholesale out of euro denominated assets as a consequence. The news that Greece was missing its latest debt repayment to the International Monetary Fund and that it was rolling up all of its debt due to the IMF in June until the final day of this month further spooked investors.

However, the noises coming out of Athens took a dramatic turn for the better yesterday with Tsipras confidently asserting that his delegation was willing and able to negotiate a debt deal which would prove acceptable to both Greece and her creditors by the end of the month. Reports from Brussels that the debt-addled Hellenic state’s creditors were giving serious consideration to a proposal which would delay the nation’s debt repayments until March 2016 added to the positive mood enveloping the shared currency. Market participants are notoriously short-termist in their thinking, so the proposal to kick the can down the road played well, sending the Pound Sterling euro exchange rate back down into the 1.3500s during the middle part of the New York session.

Looking ahead, this morning’s UK Industrial and Manufacturing Production data have the potential to be market-moving, but the main event as far as Sterling watchers are concerned comes this afternoon with the publication of the latest edition of the domestic NIESR Gross Domestic Product Estimate. Look for a showing of above April’s rolling quarterly showing of 0.4% to push the Pound Sterling higher.

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