Sterling recovers as fears calmed over stability of Greece

Published: 21 June, 2011

Sterling recovered late yesterday after comments from a top euro zone policy maker helped calm immediate fears over stability Greece.

Currency rates - June 21

EURO/GBP - 1.1307
US$/GBP - 1.6230
CHF/GBP - 1.3680
CAN$/GBP - 1.5851
AUS$/GBP - 1.5344
ZAR/GBP - 10.973
JPY/GBP - 130.15
HKD/GBP - 12.641
NZD/GBP - 1.9935
SEK/GBP - 10.373

US$/EURO - 1.4354

Financial markets were very nervous on Monday morning, after Mayor Boris Johnson, suggested in The Telegraph that the best thing would be for Greece to leave the euro. However, the panic has calmed to an extent, and focus in the UK shifts to public borrowing figures, released later today.

Yesterday was a roller-coaster in the euro zone as news emerged that euro zone finance ministers had delayed a decision on paying €12 billion worth of emergency loans to Greece, stating that Athens would first have to introduce austerity measures. The Greek public do not seem to want the austerity measures. If the funds are not paid, Greece will default on a key repayment in mid-July. The next key test is for the Prime Minister George Papandreou, who faces a vote of confidence today in Parliament. If he loses this, the chances of the tough austerity measures being passed are slim.

In the USA, stock markets suffered on Monday as investors were hesitant to buy riskier assets after a decision was delayed on emergency loans to Greece and Moody's said it may downgrade Italy's credit rating. The US dollar gained against a basket of major currencies. However, comments from the chief of the European Financial Stability Facility saw the euro recover, as the chief of the fund stated that its guarantees would be raised to €780bn.

Elsewhere the Swiss franc strengthened against its 16 major peers as investors scrambled for safe haven currencies. The Australian dollar fell versus all of its most-actively traded counterparts, losing 0.5 percent against the US currency for similar reasons.

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