Greece Vote 'No'

The much awaited Greek referendum took place yesterday and the Greeks have quite surprisingly voted ‘NO’ to the current bailout offer that was on the table.

Although this was a highly anticipated event on the currency markets it did little to affect the euro, with the single currency dropping 0.5% against the pound and 0.4% against the dollar.

It would seem that the referendum was a so called non-event as it doesn’t really change anything.

Yes, it means that the risk of a Grexit has increased but Greece will still sit down with their creditors to try and negotiate fresh bailout terms.

If an agreement can’t be made then this does point to Greece pulling out of the euro, which if rumours are to go by could be sooner rather than later.

There is a lot of talk that the Greek banks are rapidly running out of cash and without a fresh injection from the ECB they may be forced to produce a new currency in order to pay wages and pensions.

The biggest surprise however was the shock resignation of Greece’s Finance Minister, Yanis Varoufakis.

Varoufakis campaigned for the ‘NO’ vote and it was no secret that Greeces creditors weren’t on his Christmas card list, accusing creditors of “terrorism”.

His resignation could indeed be the reason that the markets didn’t react the way most would have expected.

Varoufakis was seen as a major obstacle in negotiations and now that he has stepped down the possibility of a last minute deal to keep Athens in the Eurozone may have increased.

All eyes will be on who comes in to replace Varoufakis. If a more conservative individual who is willing to listen to the creditors comes in then it could lend the euro some strength as this could be seen as a step towards coming to an agreement.

However if someone with the same stubbornness as Varoufakis becomes Finance Minister there is every possibility the euro could fall.

At the end of the day all that has been created over in Greece is further uncertainty and this uncertainty could make the euro very sensitive in the coming days.

This is the closest a country has ever been to leaving the single currency so this is very much unchartered territory.

Content supplied by the Foremost Currency Group.