The Euro to Pound Sterling (EUR/GBP) exchange rate softened on Monday to trade in the region of 0.7239 as mounting worries over Greece weighed upon the single currency. The Euro to Swiss Franc (EUR/CHF) exchange rate softened as Swiss retail sales came in mixed.
The Euro to Pound Sterling (EUR/GBP) exchange rate touched a session low of 0.7233
The Euro gave up early gains against the Pound Sterling as concerns over Greece spooked the markets and increased speculation as to whether Athens will be able to repay its debts. Unless a deal is reached with its creditors by the end of this month to unlock bailout funds, there is a very high chance that Greece will default.
‘Time available to reach an agreement at staff level is now, I would say, very limited. We have to conclude before the end of May. The only scenario that we consider in the Commission is Greece in the Eurozone,’ said European Commissioner Pierre Moscovici.
Bank officials in Greece are also warning that the number of Greeks withdrawing savings from their accounts is increasing, despite the government saying that it will not impose a levy on deposits. Around €35 billion have been withdrawn from Greek bank accounts since the end of last year. Officials believe that if a bail-in similar to the one imposed upon Cyprus at the height of its troubles there will be violence in the streets.
‘Blood on the Streets’
‘People are taking more or less everything they have got out of their accounts for fear that the government will be dipping into them next. We would see the revolt that this crisis has not yet produced. There would be blood in the streets. The Greeks are not like the Cypriots. It was wrong of the government to even raise it as a possibility and once again speaks more of its inexperience in office,’ said a Bank of Greece official.
Concerns were also heightened after a leaked International Monetary Fund (IMF) memo showed that there is no chance that Athens will be able to make a successful loan repayment on June 5.
The Euro to Swiss Franc (EUR/CHF) exchange rate touched a session low of 1.0448
The Euro was also weaker against the Swiss Franc even as data released by the Swiss Federal Statistics Office showed that retail sales in the Alpine nation fell for a third consecutive month in March, albeit at a slower pace than the fall seen in the previous month. Retail sales dropped -2.8% year-on-year in March, adding to the -3.1% drop seen in the preceding month. Sales in January declined by -1.1%.
On a monthly basis however, retail sales rose by 0.7%, reversing most of the 0.9% drop seen in February. Retail sales excluding fuel, rose 0.7%.
The soft data adds to signs of deflation in Switzerland, which was triggered by the Swiss National Banks (SNB) surprise decision to ditch the currency’s cap with the Euro.
On Tuesday the Euro could regain ground if the latest Eurozone inflation and economic sentiment reports come in positively.