Good morning and welcome to today\u2019s foreign exchange market commentary on Wednesday, the 4th of July. <\/p>\n
Success at last week\u2019s EU summit ensured positive measures to contain the immediate market panic. However, there are far bigger worries that need to be addressed. Spain and Italy\u2019s GDPs are shrinking and there\u2019s no proposal to reverse the trend.<\/p>\n
That being said, the summit\u2019s achievements were no mean feat. The agreement that Europe\u2019s banks should be able to access the bailout funds for recapitalization purposes directly at a later date circumventing national governments is no small success as it will break the doom-link between troubled banks and troubled sovereigns. That will bring down Spanish and Italian borrowing costs and would help both the countries avoid a full bailout. And Ireland, which is in a bailout program, could exit and tap the capital markets again.<\/p>\n
However, as the fine prints of the agreements emerge in future, the market euphoria may very well fade since Berlin is unlikely to write a blank cheque. Take for example the \u20ac100 billion recapitalization plan by Madrid. Dublin has already sunk \u20ac64 billion in its banks. It\u2019s unlikely that the full amounts will be reimbursed by the euro zone since the stakes in the lenders don\u2019t add up to that much. <\/p>\n
Or look at the bail out funds meant for stabilizing markets. With limited resources, they are unlikely to keep Spanish and Italian borrowing costs down in the long run. Countries seeking to access the funds will also have to agree to market reforms, which is likely to be seen an encroachment over sovereignty. This also probably explains why Greece and Spain are not rushing in to sign up.
\nEurope is still far away from a political union. It\u2019s better to keep debt-sharing and loss of sovereignty at minimum till a larger consensus evolves. Last week\u2019s summit has at least taken baby steps in the right direction. <\/p>\n
CURRENCY RATES OVERVIEW <\/strong><\/p>\n GBP\/EURO \u2013 1.2442 EUR: The single currency remained range-bound against the USD and the GBP on Tuesday as traders were reluctant to put any large bet ahead of the European Central Bank\u2019s interest rate decision on Thursday. There\u2019s a wide anticipation that ECB Governor Mario Draghi will cut rates by 0.25 percent to 0.75 percent, but the market is being cautious in the face of uncertainties surrounding the EU policymaking. The US is closed in observance of Independence Day celebrations though we have European services PMI and retail sales data to look forward to. Also Italian Prime Minister Mario Monti and German Chancellor Angela Merkel are scheduled to meet today in Rome this afternoon and the single currency may take cue from the headlines of the meeting. GBP\/EUR opens at 1.2442 this morning. <\/p>\n USD: The cable remained mostly range-bound against the greenback yesterday despite UK construction PMI number coming in softer than anticipated. Though construction contributes only eight percent to British GDP, Tuesday\u2019s report showed construction activity dropped the fastest in 2-1\/2 years in June. As the US markets remain closed today on account of Independence Day holiday, action in the FX market is expected to remain muted today ahead of Thursday\u2019s interest rate decision by the Bank of England. UK services PMI data is due today and any weakness would strengthen the chatter for further QE tomorrow. GBP\/USD opens at 1.5676 today morning. Good morning and welcome to today\u2019s foreign exchange market commentary on Wednesday, the 4th of July. Success at last week\u2019s EU summit ensured positive measures to contain the immediate market panic. However, there are far bigger worries that need to be addressed. Spain and Italy\u2019s GDPs are shrinking and there\u2019s no proposal to reverse the trend. That being said, the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[110],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2093"}],"collection":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/comments?post=2093"}],"version-history":[{"count":1,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2093\/revisions"}],"predecessor-version":[{"id":2094,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2093\/revisions\/2094"}],"wp:attachment":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/media?parent=2093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/categories?post=2093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/tags?post=2093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nGBP\/US$ \u2013 1.5668
\nGBP\/CHF \u2013 1.4952
\nGBP\/CAN$ – 1.5876
\nGBP\/AUS$ \u2013 1.5236
\nGBP\/ZAR \u2013 12.6625
\nGBP\/JPY \u2013 124.92
\nGBP\/HKD \u2013 12.1451
\nGBP\/NZD \u2013 1.9482
\nGBP\/SEK \u2013 10.8817 <\/p>\n
\nGoing on holiday? Why not compare travel money options through our sister site MyTravelMoney.co.uk and start saving!
\nHave a great day! <\/p>\n","protected":false},"excerpt":{"rendered":"