The Pound Sterling to Euro (GBP/EUR) exchange rate advanced to its best level in 3-weeks on Friday as fears over the Greece crisis increased following the failure of talks held between European finance ministers.
The Pound Sterling to Euro (GBP/EUR) exchange rate reached a session high of 1.4031
Talks held between Greek and Eurozone finance ministers broke down on Thursday as neither deal was prepared to alter their position on the terms of a Greek bailout. The failure of the negotiations increased the likelihood that Greece could leave the Eurozone and potentially leave the European Union.
The talks held in Luxembourg broke down after just an hour, highlighting the gulf that remains between the two sides.
Adding to the Euro’s woes on Friday were heightened concerns that a bank run may be getting underway as Greeks withdraw their savings from accounts. Some €2 billion worth of deposits have been withdrawn from Greek banks this week, including a record €1 billion on Thursday. In response, the European Central Bank (ECB) is due to hold an emergency meeting on the issue.
‘The European Central Bank’s decision-making governing council will hold an emergency session Friday to discuss a request from the Bank of Greece for an increase in liquidity to Greek banks,’ sources familiar with the matter said.
In a last ditch attempt to avert the nation defaulting, the Greek Prime Minister Alexis Tsipras, French President Francois Hollande and German Leader Angela Merkel agreed to stage an emergency EU summit on Monday.
Could Russia Intervene in the Greek Bailout Situation? EUR/GBP Movement Likely
European leaders are likely to be growing increasingly nervous over the Greek situation on not just an economical sense but strategic sense as Russia’s deputy prime minister Arkady Dvorkovich told an audience of Russian business leaders that the country is prepared to offer aid.
‘We support any decision to resolve the Greek debt crisis that will be proposed by Greece and our European partners. The first priority for us is our investment projects and trade with Greece. If financial support is required we will look at this question. The priority for us is a stable Europe and a stable Greece. We will support all possible means to resolve the Greek debt crisis,’ Dvorkovich said.
Pound Sterling (GBP) Exchange Rate Supported By Data, GBP/EUR, GBP/USD Ends Week Higher
The Pound Sterling was also supported by the release of data which showed that UK public sector borrowing last month fell to £10.1 billion, the lowest level seen since 2007. The figure shows that Chancellor George Osborne is on track to cut the UK’s annual budget deficit by more than previously forecast as spending fell and tax receipts increased.
‘We have more than halved the deficit, but at just under 5% it is still one of the highest in the developed world. We’ve learnt that there is no shortcut to fixing the public finances. So that is why we will bring forward a strong new fiscal framework at the Budget to entrench a permanent commitment to run a budget surplus in normal times, and the budget responsibility it represents,’ said a spokesman from the Treasury.
We can expect the Pound to make further gains against the Euro next week if the Greek crisis remains unresolved.
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