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Sterling Continues to Benefit From Eurozone Uncertainty (Matthew Vassallo)
Sterling continues to benefit from the uncertainty surrounding the Eurozone, in particular the on-going economic downfall in Greece. Despite a deal being put in place we are already hearing rumours that Greece will not be able to meet its next repayment deadline in August, which if true is likely to throw the markets back into chaos again.
I do feel a general lack of confidence in the Eurozone is now so deep rooted that the EUR is suffering as a result. Its slightly ironic as GBP/EUR levels continue to trade near a 7 year high, not because the Pound is believed to be impenetrable but because investors cannot have any long-term faith in the EUR, whilst the Eurozone continues to be dragged down by individual member states. I do feel Sterling is over-valued against the EUR, possibly by as much as six or seven cents but until the markets can be confident that the Eurozone is once again moving forward together as a single entity, then the EUR will not be able to make any great strides against the Pound.
Eurozone data yesterday in the form of Consumer & Business Confidence was positive but this did little to help the single currency, with GBP/EUR rates moving back towards 1.43 on the exchange. We have a further key data out for the Eurozone today, with the latest inflation data and unemployment rate likely to cause additional volatility on GBP/EUR rates.
GBP/AUD rates have moved back towards a six and a half year high, with on-going concerns surrounding the Chinese economy hurting the AUD. Due to Australia’s trade links with China, any slowdown in this sector is always going to have a negative knock-on effect and with the Reserve Bank of Australia (RBA) committed to devaluing the AUD in order to boost exports, I cannot see any major turnaround for the AUD in the short-term.
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Source: http://www.poundsterlingforecast.com/2015/07/30/sterling-continues-to-benefit-from-eurozone-uncertainty-matthew-vassallo/
