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Concern over the current financial crisis in Greece has once again reared its ugly head. The struggling nation is currently in a race against time to secure its next bailout payment, a decision on which will be made next week when auditors from the European Central Bank, European Union and the International Monetary Fund return to the country to ensure they are on par with targets set in place as part of their austerity program.
The euro all but lost the gains it made overnight as it tumbled to 1.3052 amid the concerns for the long term stability of the Greek economy.
The situation grew worse for the 17-nation currency as Axel Weber, the former president of Bundesbank, said he was not entirely convinced that the European Central Bank were going to be able to resolve the crisis in the Eurozone. Weber echoed the words of many analysts, who of late have offered damning reviews of Mario Draghi’s handling of the crisis, by saying that their plan will not resolve the issues at hand but rather just put off the inevitable in hope that the economy fixes itself.
GBP Rallies Despite GDP
The sterling hit a month long high today after reaching 1.6302, practically ignoring the record breaking 14.4bn budget deficit for the month of August. Analysts are now predicting further rises from the British Pound as the Bank of England looks to soften it’s approach to dealing with the UK’s current recession, by holding off with monetary easing.
The BoE governor, Sir Mervyn King, recently confirmed that their policy of “Funding for Lending” had begun to have a positive effect on the economy, a sentiment that was echoed by the central banks board member, Spencer Dale.
With the UK imports and exports being heavily reliant on the situation in Europe it has been rollercoaster ride for the sterling but these positive signs will go along way to improve investor sentiment and drag the country’s economy out of it’s current predicament.