Forex Weekly Round Up 6 July 2015 – 10 July 2015
The Euro temporarily lost ground on Sunday night after 61.3% of Greeks voted “no” and to reject the austerity measures demanded by its international creditors during their referendum.
Greece’s new finance minister, Euclid Tsakalotos, attended an emergency Greek summit with Eurogroup finance ministers and European leaders in Brussels last night. It’s the first round of serious talks since Greek voters resoundingly rejected the terms of a prior bailout offer that expired on June 30.
Chancellor George Osborne delivered the first Conservative budget for 20 years and, as predicted; the measures he unveiled were business-friendly.
Sterling lost ground yesterday morning against most currencies on the expectation that Chancellor Osborne would introduce more fiscal tightening measures in his budget (i.e increasing the rate of certain taxes and / or cutting government spending).
Some key points to note from the budget:
– Corporation tax is to be cut to 19% in 2017 and to 18% in 2020. This is seen as a move to make companies pay extra wages to the lowest earners.
– National living wage set at £9 from 2020. After the cut in corporation tax companies will be forced to pay their workers who are over 25 at least £7.20 an hour, rising to £9, by 2020.
– Public sector pay will increase by 1% a year for 4 years from 2016.
As widely expected the Bank of England kept interest rates at a record low, as its policymakers grappled with how to balance improving wage growth in Britain against more ominous signals from the global economy.
The Monetary Policy Committee left its Bank Rate at 0.5%, where it has been since the depths of the financial crisis more than six years ago, and made no statement.
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