Investors should be prepared for ”a messy few months” for Greek financial markets as chances of a possible sovereign default in the country remain high, JP Morgan Asset Management chief market strategist for Europe Stephanie Flanders warns.

So what are the implications for the rest of Europe, contagion financial and economic, the question is how severe this contagion would be. The continent’s politicians and regulators seem to think the impact would be relatively small, saying that Europe’s banks have reduced their cross-border exposure to Greece and that general confidence in the future of the eurozone is much stronger than it was a few years ago. But others think this is too complacent. The truth is that no one knows for sure.

Also for Europe and especially the UK if the pessimists are right and Greece’s exit creates a European-wide financial and economic crisis Britain will certainly be hit extremely hard. Almost half of the UK´s trade is with Europe so a new economic slump on the Continent would hammer exports and cost jobs. If there is financial contagion its effects will have a severe impact on the large UK banking and financial sector. However, if the optimists are right and the financial contagion impact of Grexit is mild the UK economy could carry on growing.

If a Grexit happens the value of the Euro will fall even further against the major currencies we are currently seeing a foreign exchange rate where £1 gives you 1.40 euro, and $1 gives you 0.920 Euro, if Greece were to default we could even see you getting 1.50 euro or more for your pound.

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Written by Christina Brady