Sterling makes the most of its I’m-not-a-euro credentials. Euro has no such defence to Greece’s problems.
The pound drifted down from €1.14 to €1.13 before jumping nearly two cents higher on Thursday. It peaked at €1.1550 on Friday and opened in London this morning at €1.15.
Sterling has been doing its best to develop a career in not-being-a-euro. With the problems in Greece holding investors’ attention, the pound wore a badge of non-involvement on its sleeve.
The Bank of England’s Quarterly Inflation Report (it does what it says on the tin) raised the spectre of a further round of quantitative easing. It was a possibility that sterling’s supporters would have preferred not to see. There is still the impression – warranted or otherwise – that the Bank is happy to see the pound weaken and that it chooses its language to help that cause.
And if the statements out of Paris, Berlin and Luxembourg over the last few month are anything to go by, the majority of Euroland finance ministers would like to see a more competitive (i.e. weaker) euro. This might explain why they have put so little effort into reassuring investors about their plans to help Greece out of its budget bind. An ‘agreement’ in that direction masterminded by the EU last week was worth less than the very small piece of paper it was printed on. In order to gain the approval of France and Germany it had to be pruned so severely that all it said was ‘Don’t worry’. Its exact wording was ‘Euro area member states will take determined and coordinated action if needed to safeguard stability in the euro area as a whole.’ As reassuring statements go it was useless.
It did not help matters for the euro when revised figures for the fourth quarter of 2009 showed slower economic growth than previously thought. Until EU leaders can formulate a coherent and credible plan to make Greek government bonds saleable the euro will remain weighed down by fears about the fiscal viability of Club Med.
After three months spent between €1.09 and €1.13 the pound has attached itself to a slightly higher range between €1.13 and €1.16. For the moment, the euro’s Greek albatross is a significant burden, balancing investors’ slightly different worries about Britain’s political and financial situation. Moneycorp suggests that buyers of the euro investing in the Greek property market should take advantage of any spikes to hedge 50% of their exposure.
The pound and the dollar are likely to strengthen further against the euro. This is subject to the UK economy continuing to claw its way out of recession and the decision of what the Euroland finance ministers will do to help the economy in Greece. In this short term situation, buying property in Greece is cheaper for UK and US buyers.
It is always best to transfer currency to Greece via the commercial rate and not the tourist rate. Currency specialists like Moneycorp often offer much better exchange rates than high street banks, and their expert dealers offer you guidance to help to ensure you are sending your money to Greece when the exchange rate is at its peak within your given time frame
It is always best to transfer currency to Greece via the commercial rate and not the tourist rate. Currency specialists like Moneycorp often offer much better exchange rates than high street banks, and their expert dealers offer you guidance to help to ensure you are sending your money to Greece when the exchange rate is at its peak within your given time frame
For information about setting up a bank account in Greece and Skopelos please see: Legal info
To find out about the best ways to transfer money to Greece and Greek Islands
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