Does Germany Save Greece Or Let Them Dangle Over Forex Cliff Today?

GBP/USD is currently trading at about 1.5355, GBP/EUR is at about 1.3530, so GBP/EUR is a little bit higher than where it was this time on Monday, and GBP/USD however, is lower. The EUR/USD was dragged lower over the course of the afternoon session after the latest Euro Group meeting between Finance Ministers in the European Union came to a crashing halt, as once again a deal or an agreement around the Greek debt pile was unable to be signed.

They didn’t even manage to release a joint statement on the issue on Monday. Yanis Varoufakis, not agreeing to sing a statement that was put in front of him. That was apparently after one that he was happy to sign was changed to reflect that the European Union wanted Greece to continue its current plan. Something that Greece has said that it would never sign since Syriza came into power. So once again we are at a rather large impasse between the Greeks and the EU.

A lot of analysts out there are talking up a prospect of a Greek exit from the Eurozone, given that we only have 10 or so days until the current bailout package or the current support mechanism for Greece runs out. JP Morgan released a report on Monday saying that Greek Banks have around 14 weeks’ worth of collateral within the banking system given the current outflows of around €2 billion a week. We have to say that obviously that will accelerate if we got into March and no formal deal have been made.

The Euro is likely to stay volatile obviously as a result of what is going on. It will increase in volatility we think as we get closer to that deadline. Forex signal providers will be mixed on the EURO depending on how they read the annoucments in the next few days. In the short term, it has come lower and we’ll be looking to see whether Greece once again picks up the bat or whether it is the European Union that does so over the course of next week or so and tries to get people back together. Certainly the Euro Group Chair Jeroen Dijsselbloem, seems to kind of bat the ball back to Greece on Monday. That ball is increasingly not looking like a tennis ball, it’s more looking like a hand grenade at the moment.

So Euro lower, GBP/EUR a little bit higher, GBP/EUR waiting on the latest inflation numbers that we have out from the UK economy today. December’s figure was 0.5%, January’s figure is expected to be around 0.4%, and the market is looking for it to continue lower, obviously as a function of these lower energy prices. We’re going to be looking at core prices more closely, we’ve talked around headline numbers given what has been going on in the Eurozone. Headline numbers are coming lower, with the core prices remaining around the 1% figure. If energy and food is coming lower, that’s only good news for the consumers. If other things for example are coming lower i.e. houses, then that’s something to bear in mind as a sound negative for the economy. As it stands at the moment, that figure is coming out at 09:30 BST, an unlikely the main mover of markets over the course of the day.

Overnight, Aussie dollar is a little bit stronger after the Reserve Bank of Australia seems to suggest that the could either have done the interest rate cut that the did at the beginning of this month, this month or next month, which kind of takes away the impetus that people thought that they might be another one coming from the Reserve Bank of Australia in the month of March.