The Euro to Pound Sterling (EUR/GBP) and Euro to US Dollar (EUR/USD) exchange rates weakened as there very little progressed was made in talks between Greece and its European creditors. Late on Wednesday the Euro had managed to advance as investors raised their bets that a deal could be reached as the leaders of Greece, Germany and France met in Brussels. The late night talks however ended in disappointment with the only thing taken from them being the blatantly obvious, ‘talks must intensify’.
The Euro to Pound Sterling (EUR/GBP) exchange rate was trading in the range of 0.7275 to 0.7316
If no deal is reached between Athens and its creditors by the end of June, the nation will fail to repay €1.5 billion owed to the International Monetary Fund (IMF). Negotiations are moving far too slowly as neither side appears to be standing their ground on austerity measures. The Syriza led Greek government is refusing to make more cuts to things like pensions whilst the creditors are insisting that more cuts be made. Both the EU and IMF are insisting that more economic reforms be made before they release urgently needed bailout funds worth €7.2 billion.
Greece may be about to become the first European nation to default on the IMF, putting it in exclusive company with Zimbabwe and Argentina.
July 20 next key date in Greek Crisis
As well as the IMF repayment, Greece will face another hurdle in July as on the 20th it has to repay €3.5 billion to the European Central Bank. In affect the debt ridden nation is battling to secure €7 billion only to then have to return €5 billion of it to its creditors.
‘The real deadline is in July when Greece must repay the money it owes to the ECB. If they miss that payment, is it would be impossible for the ECB to continue providing emergency liquidity to the Greek banking sector,’ said Moritz Kraemer, chief rating officer at Standard & Poor’s.
Also putting pressure on the Euro was the announcement by the World Bank that it had revised down its global growth forecast for the year. It highlighted the struggles being faced by developing nations and the slow economic recovery of the Eurozone.
The Euro to US Dollar exchange rate was trading in the range of 1.1238 to 1.1331
The global lender trimmed its growth forecast for 2015 to 2.8%, down from the 3.0% expansion it predicted in January.
The Euro could weaken further against the US Dollar later in the session if US retail sales data comes in positively.