Pound Pushes 2015 Best on Greek Reprieve, But Euro Could Soon Strengthen

While the pound sterling has pushed higher against the euro we hear there is a possibility that the euro exchange rate complex could rally in relief to potential further deal-making.

The Euro fell 0.9% against the US dollar with EURUSD exchange rate being seen at 1.1244 at the time of writing.

The euro fell 0.6% against Sterling after Greece was given 48 hours by the EU to come back with another new proposal. EURGBP is quoted at 0.7125 and GBPEUR at 1.4036.

GBP-EUR rests in reach of its 2015 best following Greek related developments. We note here though that fresh gains could be hard to achieve owing to the sheer strength of the resistance band between 1.41 – 1.42.

A flash currency note that we have just seen from Western Union meanwhile warns that the prospect of a broader euro rally has grown.

“Consensus expectations are the Euro could rally sharply if Greece strike a new debt relief deal. Markets should then pause to assess the longer-term implications,” say Western Union.

In yesterday’s emergency meeting, leaders from the Euro Zone countries agreed that the Greek government was finally getting serious about striking a deal after it submitted a fresh set of reform measures.

Officials agreed to step up the pace of negotiations to secure a breakthrough by Wednesday night, which countries can then sign off by the end of this week.

Cunliffe Boost for the British Pound

The pound remains near 2007 highs against the Euro after last night’s surprise BOE comments which saw Deputy Governor John Cunliffe said stronger UK wage growth could mean a more hawkish BOE.

“We can I think now point to an alignment of factors that suggest that productivity growth will start to move in the right direction over the next few years,” Cunliffe told the Automative Fellowship International dinner in Luton.

Cunliffe does however warn that there are a multitude of risks to the outlook – including the failure of productivity to pick up and the Greeks not getting their house in order.

Our reading of the speech is that it is cautious and balanced in nature and does not offer anything new with regards to interest rate timings, however other commentators have taken a more bullish view.

Euro Dollar Tipped for Parity by Goldman Sachs

The US dollar was further boosted by US data and new forecasts from Goldman Sachs.

Yesterday’s US new home sales report for May hit a 5½ year high, indicating that home buyers were stepping in before interest rates rise.

This morning investment bank Goldman Sachs repeated its call for Euro/US dollar parity with or without a Greek deal. Sterling has lost 1% against the US dollar since last week’s 2015 highs.