Euro recovers despite looming Greek default

Enrique Díaz-Álvarez30/Jun/2015Currency Updates


Sterling started the week strongly against the Dollar, although ended lower against a rejuvenated Euro on Monday. The Pound finished the London trading session 0.25% up versus the US Dollar and 0.7% down against the single currency.

Economic announcements in the UK yesterday mostly missed expectations and weighed on the Pound. The number of mortgages approved in Britain fell unexpectedly in May. Mortgage approvals, as released by the Bank of England, declined from a revised 67,580 to just 64,434, after a slight increase was forecast. This goes against much of the recent data we’ve seen out of the UK of late, which showed the housing market has been picking up in recent months. Meanwhile, the central bank also released figures showing that growth of lending to consumers eased back slightly in May, although remained at a very strong level. The measure of consumer credit decreased in May to just over £1 billion, although on a three month annualised basis, registered its fastest growth in almost ten years.

There will be a number of second tier economic announcements in the UK this morning. Focus will be on the latest growth figures for the first quarter of the year, which is expected to show a slight upward revision to an annualised 2.5%.


Following sharp declines on the back of Sunday’s headlines in Greece, the Euro rallied yesterday, appreciating by a massive 1% versus the Dollar.

Uncertainty in Greece continues to dominate headlines. The country is now all but set to miss its $1.77 billion debt repayment to the IMF today, however, traders showed a lack of panic over the prospect yesterday. While capital controls are now in place in the country, the Greek government announced it would open some banks on Thursday, despite the ECB announcing it rejected Greece’s request for 6 billion Euros of extra emergency funds on Sunday. A latest poll from Reuters now places the chance of a Greek exit at just shy of 50/50. President of the European Commission admitted that Sunday’s referendum vote in Greece would decide whether the country will stay in the Euro-area.

Away from Greece, there was some disappointing inflation data in Europe’s largest economy. Consumer prices in Germany grew in June according to the initial estimate, although were down on expectations. Month on month inflation declined by 0.1%, with prices increasing by just 0.3% on this time last year, a sign that the ECB’s quantitative easing programme has yet to take hold.

Today we’ll have the latest unemployment figures from Germany and the Eurozone, followed by inflation figures for June at 10am BST.


All of the Dollar gains over the weekend were wiped out on Monday, with the US Dollar index returning to Friday’s levels, having declined by 1%.

The number of pending home sales, a measure of contracts to buy previously owned homes in the US, continued to rise strongly in May. Pending home sales climbed to a nine year high, having increased by 0.9% month on month, and by an annualised 8.3%. This marked the fifth consecutive month of increases, and gives a further indication that the US economy is in an increasingly strong position after recent retail sales, consumer sentiment, and employment data suggested the economy was building momentum following its first quarter slowdown. However, markets were little moved by the good data, with traders instead focused on developments in Greece. Elsewhere, the Dallas Fed manufacturing index improved on last month, although remained negative at -7.0 in June, from the -20.8 recorded in May.

In the US economy today, the Conference Board will be announcing its consumer confidence measure for June at 3pm. Confidence is expected to increase marginally on previous, having dipped slightly from the eight year high recorded at the beginning of the year.

Rest of the world

The Swiss National Bank confirmed that it intervened in the foreign exchange market over the weekend in a bid to hold down the Swiss Franc in the midst of uncertainty in Greece. Meanwhile, Polish Prime Minister Ewa Kopacz claimed that the Polish Central Bank has the resources to intervene in the FX market if required.


Written by Enrique Díaz-Álvarez

Chief Risk Officer at Ebury. Committed to mitigating FX risk through tailored strategies, detailed market insight, and FXFC forecasting for Bloomberg.