Greece say NO to austerity

Paresh Davdra is the Dealing Director of RationalFX, Currency Specialists. Wednesday 08th July 2015 08:18 EDT

Prime Minister Alexis Tsipras has said Greeks made a "brave choice" as thousands celebrated in the streets after hearing the final result despite European officials warning that it could see the country ejected from the Eurozone. Greece's governing Syriza party had campaigned for a "No", saying that the bailout terms were humiliating. Mr Tsipras said late on Sunday that the Greeks had proved that "democracy won't be blackmailed."

To further add to the turmoil, Greece's finance minister, who often clashed with creditors, resigned. Yanis Varoufakis wrote on his blog that he had been "made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my... 'absence' from its meetings". The Euro temporarily lost ground last night after 61.3 percent of Greeks voted “no” and to reject the austerity measures demanded by its international creditors during their referendum.

On Friday 3rd July a report revealed Britain's private-sector services grew more than expected last month, suggesting the economic recovery picked up going into the second half of the year. The Markit/CIPS UK Services Purchasing Managers' Index (PMI) rose by 2 points in June to 58.5, topping all forecasts and combining with positive constructions figures painted an optimistic picture for the UK.

But it warned that the recovery looks increasingly unbalanced. Growth in British manufacturing declined to its lowest in more than two years last month, according to its survey on Wednesday. The latest services PMI makes it more likely the Bank of England will want to raise interest rates from a record low 0.5 percent later this year, Markit said.

The UK economy has grown faster than previously estimated in the first three months of the 2015. The Office for National Statistics said the economy grew by 0.4% in the quarter, compared with an earlier estimate of 0.3%. Growth was boosted by a better performance from the construction industry than previously estimated. Annual growth to March was also revised up to 2.9% from 2.5% previously.

The US Dollar strengthened against many of its peers in response to the Greek crisis causing heightened demand for safe-haven assets. The appreciation has been slow moving, however, after Tuesday’s impressive confidence data was countered by a fall in business conditions. June’s ISM Manufacturing index bettered estimates and rose to 53.5 in June from 52.8 in May, further strengthening the Dollar. The index is back to its January reading after slowing in March and April. 

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