The pound picked up against the euro this morning and the dollar touched a 7-month high against the single currency due to uncertainty surrounding the support package for Greece.
Pound Sterling – UK Markets
Sterling rose against the euro this morning after European leaders indicated they will support Greece, but won’t necessarily deliver direct aid.
Earlier this week the pound had come under pressure after a dovish BoE report, in which the UK inflation outlook was revised down, increasing the possibility of further quantitative easing. However, the latest focus on the eurozone has propped up UK currency, which also inched higher versus the dollar some 0.1% in earlier trading.
It’s clear to say that focus has moved away from the BoE report this week and shifted back to euro weakness due to a palpable lack of detail in the proposed rescue package. This may be a good time to sell GBP/EUR, as a firm direction from the ECB would likely arrest the slide. Current trading sees GBP/EUR at 1.1523.
US Dollar – US Markets
The dollar trimmed losses against the yen but rose against the euro yesterday after data showed US jobless claims fell over the last week. At time of writing the greenback traded at 0.7372 against the euro and 1.5629 against GBP.
With a number of important data releases expected today, the dollar could experience a fair amount of volatility before the trading week comes to an end. At 1330 GMT the retail sales reports will be published, giving investors an idea as to how well the American economy fared last month and whether it is really recovering the way most are expecting.
With the euro’s vulnerability and sterling’s ongoing struggles, the dollar is still seen as the safe bet. The strong performance levels seen of late will likely continue.
Euro – European Markets
The euro weakened against a host of its major counterparts this morning on concern an EU plan to assist Greece will fall short in helping the nation tackle its fiscal problems and also suffered from a lack of clarity in exactly what the package entails. The single currency was further hampered by a report showing Germany’s economic recovery unexpectedly stalled in the fourth quarter last year, damping demand for the region’s assets.
EU leaders declined to set out concrete steps to aid Greece in a statement released following their summit in Brussels yesterday, pulling the euro down to low levels against pound and the dollar.
Other Currencies – Highlights
The Swiss franc declined against the dollar and the euro this morning. The franc dropped 0.2% to 1.4679 per euro and was 0.7% weaker at 1.0782 against the dollar.
Sterling Rises on Hopes of EU Softening Tone on Backstop