Good morning. The political drama in Greece is still unfolding after Prime Minister George Papandreou dropped the referendum proposal and instead chose to build political consensus on a new bailout plan after EU leaders started talking of a possible Greek exit from the EU to preserve the euro. The no confidence voting is expected to take place tonight. If the Prime Minister loses the no-confidence motion, Greece may hold a snap election amid growing political instability.
If that happens, Greece may not receive the next tranche of bailout money that it so desperately needs. Papandreou said he’ll be happy to step down if his Socialist party backs him in the confidence vote today. “I don’t care about being re-elected. I am interested in saving the country,” said Papandreou. Now, here we go again. No further comments on that. Nonetheless, the drama has managed to overshadow the G20 meeting being held Cannes.
There was however, some surprise after the ECB decided to cut interest rate yesterday. Most analysts had expected a rate cut in December. This should augur well for the regions growth as the peripheral countries struggle to keep their houses in order. Another round of rate-cuts may take place in December to erase the rises seen this year.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1586
GBP/US$ – 1.5985
GBP/CHF – 1.4180
GBP/CAN$ – 1.6220
GBP/AUS$ – 1.5416
GBP/ZAR – 12.5982
GBP/JPY – 124.89
GBP/HKD – 12.4305
GBP/NZD – 2.0158
GBP/SEK – 10.5381
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EURO: Sterling rose against the Euro on Thursday after the ECB’s surprise rate cut decision yesterday. The common currency remained volatile over Greek developments over the possible exit of Athens from the EU. The EU/GBP pair was last trading at 0.8610 yesterday, still down 0.1 per cent on the day.
USD: Cable marched forward against the greenback to touch the 1.60 level, a gain of 0.3 per cent after falling to 1.5876 earlier in the day. The Euro swung in a 1.5 per cent range against the greenback over Greek uncertainties before closing 0.5 per cent lower. Volatility is expected to continue today.
Elsewhere, Sterling gained against the riskier South African Rand and Scandinavian currencies. Both the AUD and the NZD also lost ground against the cable yesterday.
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Have a great day!