Sterling trades back into 1.20 vs Euro

January 20th, 2012 Brock Hailes Leave a comment Go to comments

POUND
Sterling is hovering near a two week high against the US currency this morning and is trading back into 1.20 against the Euro. The pound is very sensitive at the moment to speculation of further QE happening in February and developments with the Greek Private Sector Initiative (PSI) talks. Today is a quiet one for UK economic data but this may well be the calm before the storm with Public sector borrowing figures due tomorrow morning, Mervyn King speaking in the evening, MPC minutes and preliminary (GDP) growth figures due for the last quarter of 2011 on Wednesday. There is also a raft of other data but the GDP number is particularly important as many expect it to show the UK economy contracted at the end of last year, providing further support for QE and forecasts that the economy is dipping back into a recession.

EURO
The Euro is trading relatively flat against the pound but has made further gains against a weaker USD, now trading comfortably into 1.29. Greece and its talks with private creditors is continuing to steal the limelight with private creditors saying yesterday that they has come to the limits of what losses they could maintain in a Greek debt swap, shifting the responsibility to the EU and International Monetary Fund (IMF). This afternoon sees the release of consumer confidence data before a bunch of French, German and European manufacturing and Industrial production data tomorrow.

US DOLLAR
The USD is continuing to be put under pressure at the start of this week, mainly by an improvement in market confidence and US existing home sales which increased in December adding to market confidence and appetite for risk. There is no economic data due today but the Federal reserve bank will be meeting tomorrow to discuss monetary policy, it is therefore unlikely we will see any large USD based moves today before tomorrow.

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