13 Jul 2015
EUR/GBP: Bears in control, Greek deal could be compromised
FXStreet (Guatemala) - EUR/GBP is currently trading at 0.7106 at time of writing with a high of 0.7202 and a low of 0.7087.
EUR/GBP price action and technical analyses
EUR/GBP has been better offered from region of 0.7180 and down to test the 0.71 handle and bulls commitments while a Greek deal has been agreed, awaiting parliamentary approvals. A recovery from the lows is taking place back on to the 0.71 handle. Technically, the greenback is driving the cross as EUR/USD penetrates 1.1020 at time of writing. Further dips should find initial support at .7185/55 ahead of the 0.7057 May low, according to Karen Jones, chief analyst at Commerzbank.
EUR/GBP fundamentals
Greece has capitulated in return for the promises from the EU of a further bailout and to qualify for up to 86 billion euros of aid that Greece needs to stay in the euro. Part of the reforms involves Greece creating a €50bn asset fund through privatisation, half of which will be used to recapitalise the banking system.
Dijsselbloem has recently said that it will be more likely four weeks than two for the time it may take to negotiate a new bailout, and that is presuming that the reforms are passed in parliament this wednesday.
Greece's prime minister, Alexis Tsipras, has to pass six reforms through the Greek parliament by Wednesday which are said to include tax hikes, spending cuts, and pension reforms. Tsipras has had to face the Syriza-led bloc, who rebelled this weekend when he sought their endorsement for such reforms.
It is essential that Greece show their commitments to these reforms in order for the deal to go ahead. Uncertainty doesn't favour EUR/GBP, while the euro acts as a funding currency and the GBP as a safe haven in some instances and as markets start to look ahead, presuming we are clearing out the noise around Greece, interest rates will come back in to focus and some analysts are calling EUR/USD parity by year end.
However, as this stage, the euro's premium on a Greek deal will be compromised as investors realise the scale of Greece's challenges while the European Central Bank continues to hold back from expanding its aid for Greek lenders, expressing their desire to wait for Greek lawmakers to approve reforms first.
EUR/GBP price action and technical analyses
EUR/GBP has been better offered from region of 0.7180 and down to test the 0.71 handle and bulls commitments while a Greek deal has been agreed, awaiting parliamentary approvals. A recovery from the lows is taking place back on to the 0.71 handle. Technically, the greenback is driving the cross as EUR/USD penetrates 1.1020 at time of writing. Further dips should find initial support at .7185/55 ahead of the 0.7057 May low, according to Karen Jones, chief analyst at Commerzbank.
EUR/GBP fundamentals
Greece has capitulated in return for the promises from the EU of a further bailout and to qualify for up to 86 billion euros of aid that Greece needs to stay in the euro. Part of the reforms involves Greece creating a €50bn asset fund through privatisation, half of which will be used to recapitalise the banking system.
Dijsselbloem has recently said that it will be more likely four weeks than two for the time it may take to negotiate a new bailout, and that is presuming that the reforms are passed in parliament this wednesday.
Greece's prime minister, Alexis Tsipras, has to pass six reforms through the Greek parliament by Wednesday which are said to include tax hikes, spending cuts, and pension reforms. Tsipras has had to face the Syriza-led bloc, who rebelled this weekend when he sought their endorsement for such reforms.
It is essential that Greece show their commitments to these reforms in order for the deal to go ahead. Uncertainty doesn't favour EUR/GBP, while the euro acts as a funding currency and the GBP as a safe haven in some instances and as markets start to look ahead, presuming we are clearing out the noise around Greece, interest rates will come back in to focus and some analysts are calling EUR/USD parity by year end.
However, as this stage, the euro's premium on a Greek deal will be compromised as investors realise the scale of Greece's challenges while the European Central Bank continues to hold back from expanding its aid for Greek lenders, expressing their desire to wait for Greek lawmakers to approve reforms first.