The Euro to Pound Sterling (EUR/GBP) exchange rate weakened on Thursday to slide back towards 0.70 as the European Central Bank’s (ECB) quantitative easing programme made an impact and as fears increased that Greece could default and leave the Eurozone.
The Euro to Pound Sterling (EUR/GBP) exchange rate fell to a session low of 0.7151
The possibility of a Greek exit from the Eurozone increased on Thursday as it was revealed that the European Central Bank granted less emergency liquidity than Athens had requested. According to ECB insiders, the bank granted €400 million, below the €900 million requested by Greece.
Greek banks are already under strain after the ECB cut them off from regular funding operations in February and forced them onto emergency liquidity assistance from the Greek national bank. The Syriza led government could run out of cash by the end of this month as it seeks to reach a deal with the Eurozone leaders to receive aid payments.
Could Greece Turn To Russia?
A deal is looking unlikely to be reached as the war of words between Athens and Berlin escalates. Greek Prime Minister Alexis Tsipras is opposed to imposing more austerity measures upon his people, but the nation’s creditors are demanding that he do so if he wants to receive bailout funds that would prevent a default.
On Wednesday, Greece’s Parliament approved a number of anti-poverty measures despite warnings from creditors that the legislation ran contrary to the overall package of changes Greece had agreed upon last month to adopt.
‘They’re asking us to freeze legislation so that thousands of families without electricity can continue to freeze. People have asked us to put an end to austerity and bailout agreements, to begin the process of reclaiming the dignity of the nation,’ Tsipras said in an address to parliament.
Relations were also not helped as it was revealed that members of Syriza took part in the rioting, which took place in Frankfurt on Wednesday.
With relations with European partners severely strained and with time running out, Greece could turn elsewhere for support. Next week Tsipras is set to meet with Russian President Vladimir Putin, could closer ties with Russia be what saves Greece? With desperation setting in, a deal with the EU’s main rival should not be ruled out.
Tspiras is probably gambling that if he shows signs of coming to an arrangement with Russia that the EU will cave into his demands and grant the bailout funds. The last thing the EU and NATO would want is to see a Russian military base being established in Greece.