European governments have offered an aid package to Greece, relieving tension in the Euro-Zone and pushing the single currency to a three week high against a weakened Dollar.
Pound Sterling – UK Markets
Sterling slipped against the Euro this morning, retreating from a seven-week high. Despite its losses against the single currency, the Pound hit an eight-week high versus the Dollar. However, this rally has since stalled after Gordon Brown vowed to restore services in the UK.
Market participants believe additional gains are unlikely given the political uncertainties ahead of the UK general election, which will likely hamper UK currency until clearer signs emerge as to who will win.
By 0930 GMT Sterling traded at EUR1.1316 and USD1.5459. For those making money transfers, today’s data includes the trade balance, BRC retail sales and the RICS house price balance which gauges the cost of homes in the UK.
US Dollar – US Markets
The Dollar slumped against a basket of other majors as news of the Greek aid plan increased demand for riskier assets to the detriment of the safe-haven greenback. At 0947GMT the Dollar traded at GBP0.6468 and EUR0.7320 and the dollar index fell 1.1%, the most since July 2009.
Anyone making a US money transfer would be advised to pay special attention to the Trade Balance, the Retails Sales reports, weekly Unemployment Claims and the CPI inflation figures for March on Wednesday.
Euro – European Markets
The euro surged to a three week high against the dollar after European governments offered Greece a rescue package thought to be worth as much as 45 billion euros at below-market interest rates.
The support will take the form of bilateral loans from the euro area member states, with the amount tailored to meet Greece's funding needs over the next three years. The European Commission will act as a conduit and deal with the bilateral negotiations, while the European Central Bank will act as the paying agent.
The amount provided by the euro area exceeds market expectations; however the complexity of the deal and the IMF's involvement will likely fuel an ongoing debate surrounding the deal. Whilst analysts have been assured of the EU’s determination to help Greece, it is possible that markets will only respond decisively when financial help is actually disbursed.
Other Currencies – Highlights
South Korea’s won rose to its strongest in more than 18 months as the nation’s central bank raised its economic forecast and Asian stocks reached a 20-month high.
News agencies are reporting that trading in currency options shows that emerging economies have become safer relative to developed nations than at any time in almost two years.
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