Pound:
Sterling is back on the up this morning against the majors as the Euro sinks amongst uncertainty surrounding the Greek bailout. Angela Merkel resisted any swift bailout of Greece last night causing a rift amongst European members on how best to tackle risks posed to the Euro. The pound for once has taken some advantage of this uncertainty in the member state but as highlighted yesterday, the UK cannot afford to be complacent about the plight of the PIIGS (Portugal Ireland, Italy, Greece and Spain) as UK banks are exposed to these countries to the tune of 16% of GDP (approx £250bn). This would indicate that sterling gains against the Euro could be limited as many in the market will not see sterling as a safe-haven option away from euro zone debt concerns.
Aside from low impact lending data due out at 10am the market will now focus on rightmove house price data due overnight on Sunday and CPI inflation data on Tuesday. I’m off for a romantic valentines day at the Columbia road flower market in London’s East end this Sunday, have a very happy weekend and valentines day!
US Dollar:
The Dollar continues to rise against the Euro as investors look for a safe haven against the reigning uncertainty in Europe. After a late rally yesterday, the pound is beginning to slip against the dollar GBP/USD down 0.14% as of 09:33 GMT. However, early trading has seen plenty of movement for the GBP/USD pair, trading either side of +0.01% and -0.01% change.
We have a trio of important high impact US data due out this afternoon at 1.30pm to include core retail sales, retail sales and preliminary consumer sentiment all forecast to be higher than previous months. Sales at US retailers. Sales at U.S. retailers probably climbed in January for the third time in four months, signaling the consumer spending recovery that began in late 2009 will be sustained this year. A drop in unemployment and a longer workweek last month signal the economy is poised to generate jobs, which will lead to gains in income that may further lift demand.
Euro:
The Euro was subject to more losses continuing a three day streak. The Euro was down 1% against Sterling after a series of disappointing reports highlighted the scale of the problem in the Euro Zone. The Euro began its slide after it emerged that a quick fix solution was not forthcoming, this was then compounded by poor Euro Zone data showing fourth quarter gross domestic product indicated only moderate growth at best, this was reflected in the Euro falling to 87.15pence on the day.
German and Italian GDP figures were both disappointing, the Germans reporting flat results and the Italian figure well below the 0.4% growth expected by the market. Immediate reaction from this news has seen the Euro fall 0.51% against the dollar as of 09:24 GMT. A backstop – as opposed to an outright bailout – might stabilize the euro for a short period of time, but sovereign debt problems and lack of growth prospects are likely to continue to dog the common currency, said Steve Barrow, head of G10 strategy at Standard Bank in London.
Quote of the Day
There are three ingredients to the good life; learning, earning, and yearning.” – Christopher Morley
