How will the Greek bailout affect the Dollar?

After 13 hours of talks EU ministers finally agreed to bailout Greece for a second time. The GBP/USD cross opened the day in the mid $1.58’s (Interbank) on the back of the bailout announcement. With many analysts still predicting that the dollar could drop towards the $1.50 mark within the next 12 months we could see the rates returning towards the lows we saw at the start 2012.

One of the reasons the GBP/USD cross is not a million miles from the highs we saw in October 2011 is down to the improvements in Greece but with other countries still struggling and with the pound seemingly performing better than expected (for no apparent reason) it is unlikely to break the $1.60 mark as . For that reason booking a rate of exchange using a Forward contract can protect you from the predicted adverse movements.

There is no data scheduled to come out of the US for the second day running following Presidents Day yesterday. However in the UK we had the Public Sector Net Borrowing figures released which came back better than expected. For the first time in four years the government received more money than it spent for January. The Bank of England said that we could see the economy ‘Zig-Zag’ in and out of growth this year and so far this seems to be true.

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