EUR Strengthens Ahead of Prospective Greek Deal (Matthew Vassallo)

The EUR showed signs of life yesterday, with an aggressive move against GBP and an improvement against the USD. GBP/EUR rates dropped to 1.3839 at the high, an improvement of over 2 cents from the low on earlier this week. Whilst Sterling has recovered slightly today, it is likely that the markets have started to factor in a prospective deal between Greece and its creditors.

With the situation continuously evolving, it is difficult to know whether this is another false dawn, or something more concrete. My opinion has always been that they will come to an 11th hour agreement and when they do it is likely to ease pressure on the EUR. Whilst I don’t expect Sterling’s value to plummet as a result, it could be that the recent lows for GBP/EUR rates have now passed.

If we take a closer look at Eurozone economic data, there has certainly been a marked improvement of late. I certainly feel the Quantitative Easing (QE) programme is starting have a positive effect and if you removed the problems in Greece from the scenario then I feel the Pound is over-valued. This of course is impossible, as the problems in Greece will continue to hurt the EUR but it is an example of why I would not be gambling on this market. The situation and landscape could change every quickly and opportunities that are currently available to buy at attractive levels may not be around for much longer.

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