GBP/EUR back above 1.40
Quote of the day: “Never interrupt your enemy when he is making a mistake”
August 13th: Highlights
- Sterling struggles against the Euro
- China weighing on US Dollar
- Greek bailout vote following marathon talks
- Aussie hammered by Chinese cut
Sterling sank to a one month low against a stronger Euro yesterday following data which showed British wage growth slower than expected in June, taking some pressure off the Bank of England to raise interest rates. Sterling fell by around 1 percent over the course of the day, its weakest since July 13.
GBP/EUR has since recovered slightly, breaching the psychological 1.40 mark and is trading in the region of 1.4062
While Sterling struggled generally across the board, it pushed higher against the US Dollar as news emanating from China weighed heavily on the world’s most traded currency. China pushed it’s currency lower for the second day running. GBP/USD is trading in the region of 1.5629
Greece has agreed a draft deal with creditors, which includes sale of ports ($6bn privatisation) and an overhaul of the healthcare industry. In order to unlock bailout money, there will be a vote on no fewer than 57 ”prior actions.”
The Germans have voiced concerns and criticised the bailout agreement. In a paper released by the Finance Ministry, it is questioning the IMF’s participation, debt sustainability and privatisations. The bailout requires approval from parliaments in Germany, Greece and other countries before Aug 20 when the Greeks must repay 3.2bn Euros to the ECB.
In short, the Germans want a commonly accepted hard-nosed program to be even harder. Watch this space.
In today’s early trade, the US Dollar regained some ground as the rate of the fall of the Yuan eased, but still remains firmly on the back foot with investor worries centred around whether the Fed will keep rates on hold or longer. EUR/USD was down nearly 0.5% to 1.1117 from yesterday’s high of 1.1213.
The Yuan has plummeted almost 5% against the USD this week following the actions of devaluing its currency in a surprise move on Tuesday to shore up its ailing economy and revive growth. The People’s Bank of China described the move as a ”one-off depreciation.”
The Aussie Dollar dell on news of the second Chinese Yuan cut. GBP/AUD reached highs of 2.15, best levels seen since 2009. The pair has since dropped back, but investors believe the Aussie Dollar could fall yet further.
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