Written by Jon Beddell on March 2nd, 2012
We see resistance around the 1.2100 level but momentum is undeniably in the Pound’s favour.
Foreign Currency Market Update – GBP / EUR Update
Sterling spent last week very much on the back foot as a decision on the second Greek bailout approached. However, despite releasing €58bn to relieve pressure on Greece’s creditors, the balance of €71bn has been withheld pending a decision to be made at a March 12th meeting of EU members. This will likely be released as long as members are satisfied that Greece is meeting the strict austerity measures required under the deal, but markets will remain anxious as the postponement will take Greece to within nine days of bankruptcy as a €14.5bn loan repayment is due on March 20th. In this climate it is hard to see the Euro making significant progress until the decision is finalised, and certainly over the last 48 hours Sterling has benefitted from the heightened uncertainty, surging back toward the 1.20 level that was all but lost just a week ago.
There was some reasonable data last week. House prices rose 1.4% in February according to Rightmove, more than the 0.4% expected. The government managed a £10.7bn current account surplus for January, higher than the £9bn expected. This week there have been no market moving items of note. However, Nationwide also saw a positive move in house prices, and consumer credit expanded in January far more than expected, a general an indication that people are willing to spend money.
Sterling is back on the offensive. We see resistance around the 1.2100 level but momentum is undeniably in the Pound’s favour. We would only become concerned on a break beneath the 1.1750 level that marked the low last week.
Summary of major upcoming data releases that we think may move the market.
- Foreign Exchange Rate Forecast – The Pound initially fell against the Euro exchange rate
- Pound Sterling, the Euro and US Dollar exchange rate forecast – The Pound declined heavily against the Euro exchange rate last week
- The Pound made two separate incursions above the significant 13.0000 level against the Rand
- Pound Sterling to Euro Foreign Currency Exchange Rate Forecast – Sterling tests one year low…
- Pound, Euro US Dollar Currency Forecast – The Euro traded higher against the Dollar over the Easter weekend