What Will Happen to Sterling if Greece Defaults?

 
 
CurrencySolutions.co.uk
CurrencySolutions.co.uk
LONDON - June 23, 2015 - PRLog -- This week, Sterling has slipped slightly from its seven-year high but remained strong. Market gurus are pointing to the market's pensive attitude concerning the possibility of a Greek default, which could be bad news for the Eurozone. With a possible deal on the horizon, a general sense of uncertainty hangs in the air, as pundits wait to see which way the axe falls.

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Talks between Greece and its creditors failed to reach a resolution on Sunday, sending shivers of trepidation through the international investment community. However, Greece remains hopeful that they can strike a deal with the European Central Bank this week. They will need to satisfy the bank's concerns over Greece's GDP, and they will no doubt paint a rosy picture of their prospects.

It is a confidence that Greek citizens don't seem to share. The rumours of the impending default have been linked to the recent upsurge in the price of Bitcoin, as Greek nationals and firms seek to hedge their investments in a less volatile(!) currency. Of course, there are analysts who will point out that it could easily be a coincidence, and there is no way to know exactly who is buying all the bitcoins. They are untraceable, after all. But it is worth noting that the Greek University of Nicosia has recently rolled out the world's first Cryptocurrency degree.

Not that the Greek situation has been all bad news for the UK. The inflow of foreign money into the economy over the last several months has in part been the result of investors seeking a safe haven for their Euro funds. At Currency Solutions (http://www.currencysolutions.co.uk/converter), we're acutely aware of how the flow of currency between nations can affect an economy. It has contributed to the upturn in the British economy, bolstered by increasing wages and public spending.

It's good news for British citizens on the eve of the tourist season, as it means that their pounds will have more buying power. Just how much will be revealed very soon, as the situation in Greece is likely to have a big effect on the price of the Euro. But you're sure to see some smiling faces in Britain's airports this summer.

The combination of healthy a UK economy and falling prices in Europe could tempt Brits to invest overseas, as European property prices will be tempting. In fact, estate agents specialising in houses in Europe are already reporting a 31% increase in enquiries over last year. Overseas investment could have a cooling effect on UK economic growth, as the flow of money would reverse. But the holiday home market shouldn't make too much of a dent in our domestic situation.

In the light of the healthy Pound, there are concerns that the Bank of England may raise interest rates. It would be good news for banks, but bad news for borrowers and bond investors. However, Citi analysts remain confident that the rate increases will not be aggressive - the last thing they want to do is stifle the economic growth at this stage!

If the Greek deal should fall through, and the Euro should suffer as a consequence, Sterling will make a very attractive safe haven for international investors. With the price of the dollar currently in decline, the pound is in an enviable position, and will no doubt attract more foreign investment. Of course, that could all change when the official US GPD estimate is released to the world at the end of July.

It's an exciting time to trade forex, with a number of global possibilities hinging on the outcome of a couple of events, both of which will unfold within the next month. With so much money set to cross international borders, there will be plenty of opportunities to make or lose fortunes in the next few weeks. It's a situation that we at Currency Solutions will be watching with great interest.

In general, for the average UK citizen, the future looks sunny. For those with overseas investments, or with funds locked up in bonds, the future is a little uncertain. They'll be scanning the horizon for storm clouds, an act that seems somehow fitting for a British summer.

Currency Solutions (http://www.currencysolutions.co.uk/) are a UK firms specializing in fast currency conversions. They have helped hundreds of thousands of clients to exchange billions of pounds in currency. Their service is faster and more convenient than using your bank to exchange currency.

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