The credit ratings agency Standard and Poor’s yesterday downgraded Greece’s debt status to ‘junk’ amid fears that the country may default.

Pound Sterling – UK Markets

The Pound remains fairly steady against the Euro this morning, although levels seem to be falling slightly to what some consider to be a short term base as the turmoil in Greece continues. As the British elections reach full steam the Tories have announced they will look to team up with smaller parties to avoid proposed plans that the Lib Dem’s will demand an electoral reform should results point to a hung parliament. As the UK’s budget deficit jumped 76% through March to £152.8bn the Pound dropped somewhat yesterday against both the Euro and the Dollar. This was in parallel with worries that the General Election next week will result in a parliament with very little parliamentary support.

US Dollar – US Markets

In line with Standard and Poor’s downgrade on Greece, the Dollar pushed close to one year highs against the Euro late Tuesday afternoon. Unfortunately, as positive reports of greater than expected crude stocks filtered through from the US, a strong Dollar will negatively affect the purchasing power of other countries. As expected, data released has revealed consumer confidence reached its highest levels since September, 2008, but unfortunately this has done little to hide the news spiraling out of Greece.

Euro – European Markets

Germany reacted to strong criticism yesterday stating that they ‘would not let Greece fall’. This strong reaction came in line with IMF worries that a further €10bn would be needed to bail Greece out. Reactions to this will undoubtedly be the focus of attention over upcoming days. The issues in Greece are expected to spread, somewhat like a bad epidemic, over to Portugal as well as they were also downgraded by Standard and Poor’s. However, even though these actions were drastic, they were not unexpected and thus the Euro has not plunged to drastic lows overnight.

Other Currencies - Highlights

The ongoing Goldman Sachs saga proceeded to grow yesterday as a Senate subcommittee launched a scathing attack on the wrongdoings of the bank. Junior Goldman Sachs banker, Fabrice Tourre or ‘Fabulous Fab’ as he previously referred to himself was in the line of fire for hours during yesterday’s hearing. Whilst currencies are doing cartwheels everywhere else in the world, the Rand stood firm, largely ignoring the events surrounding Greece. Further South, as inflation levels continued to be greater than expected down under, the Australian Dollar clawed back some ground, leading to thoughts that another rise in interest rates could be on its way.