The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened on Tuesday to hit a session high of 1.349 as sentiment towards the single currency was knocked by concerns over a potential Greek exit from the Eurozone.
Worries over a ‘Grexit’ are high after Greek Prime Minister Alexis Tsipras said that he will deliver on his pre-election pledge to get rid of austerity measures and announced that he has rejected an international bailout extension.
The standoff between Greece and its creditors looks set to continue after German political leaders announced that they would not grant assistance to Greece without strings attached. The impasses could see Greece go bust by the end of the month when its current bailout ends.
‘It’s clear that the risks to the world economy, the risk to the British economy of this standoff between the Eurozone and Greece, are growing each day. The risks of a miscalculation or a misstep leading to a very bad outcome are growing as well,’ said UK Chancellor George Osborne.
Could Greece Turn to Russia for Cash?
Fears that Greece could turn to other nations for funding were heightened after Greek Defence Minister Panos Kammenos suggested that the country could potentially turn to Russia, China or the USA for the cash.
‘What we want is a deal. However, if there is no deal and if we see that Germany remains rigid and wants to blow apart Europe, then we have the obligation to go to plan B. Plan B is to get funding from another source. It could be the US at best, it could be Russia, it could be China or other countries,’ Kammenos said.
With the conflict in Ukraine, escalating the last thing the European Union will want to see is Russia coming to the rescue of the Greeks.
UK Data supports Pound (GBP) Exchange Rate
The Pound found support from the release of reports, which showed that retail sales growth picked up strongly in the first month of the year and as the NIESR institute said that it is forecasting that the UK economy will see its best annual growth figures since 2006 in 2015.
Data released by the Office for National Statistics (ONS) meanwhile showed that manufacturing production picked up by 0.1% in December, beating economist forecasts for a fall of -0.1%. On a yearly basis production rose by 2.4%, beating forecasts for a rise of 2%.
Euro Exchange Rates:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
Euro,
Euro,
Euro,
[/table]
