The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast to make gains if Europe’s Finance Minister’s cannot reach a deal with Greece over the terms of the nation’s bailout programme.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a session high of 1.3527
The Euro found some support on Monday ahead of the talks as the latest Eurozone balance of trade data came in stronger than forecast.
According to the report the Eurozone’s trade surplus widened from €21.2 billion to €24.3 billion in December.
With the new Syriza led Greek government insisting that it will not stick to the terms of its current bailout programme and its creditors (led by Germany) refusing to budge and easing austerity in the nation the talks are widely expected to end in failure.
‘I expect difficult negotiations on Monday but I am full of confidence. I am in favour of a solution where everyone wins. I want a win-win solution. I want to save Greece from tragedy and Europe from a split. I promise you: Greece will, in six months time, be a completely different country,’ said Greek Prime Minister Alexis Tsipras.
The Germans meanwhile are sceptical that a deal will be reached as German finance minister Wolfgang Schauble said he is not optimistic.
‘From what I’ve heard about the technical talks over the weekend, I’m very sceptical, but we will get a report today and then we’ll see,’ Schauble.
French Finance Minister Michel Sapin also said that he was doubtful of a deal being reached and warned that Greece would face huge dangers if it ends up leaving the Eurozone. He said that Athens cannot abandon its commitments but did add that the New Greek government does have a mandate to push for changes.
Euro Forecast to fall
If it appears that no deal will be reached between the two sides, the Euro will soften against its major peers.
‘The market consensus is for them to do a deal by the end of this week. But we think that if there’s no deal today and the clock starts ticking then the Euro will look increasingly vulnerable,’ said Susanne Galler, a strategist from Jefferies.
Greece is set to run out of funds on February 28.
