Neil Davies, Head of Trading at PlutusFX, takes a look at the Greeks.
Greece is unlikely to find itself out of the news for the rest of the month, so I thought it worthwhile to try and find a lighter side to the tragedy.
The euro remains as weak as a limp Greek salad left out in the Mediterranean sun, currently trading at GBP/EUR 1.348 and EUR/USD 1.13. Meanwhile the anti-austerity government is presenting its plans to Eurozone finance ministers in Brussels, wanting to scrap 30% of its debt and instead replace it with reforms. Clearly they have a good sense of hummus. With the EU-IMF bailout expiring on 28th February, what they require to start is a bridging loan to give themselves time to agree a new four year reform plan. Meanwhile most EU finance ministers think that it is feta that they do not renege on their bailout conditions.
With Greek debt standing at 174% of GDP simply Metaxing their way out is not an option. If they achieve no success inside the EU, the Greeks may look to Russia for assistance. This is perhaps the one card they have up their sleeves. With the Ukraine conflict on a knife edge, the last thing the Germans will want to do is allow the Russians what might be seen as a foothold in Southern Europe.
Time for another ouzo I think.