Yesterday’s meeting of EU finance ministers did little to calm markets fears over the European debt crisis. The Euro slid in value to a four month low against the Japanese Yen and to a record low against the Swiss Franc. It seems they are still willing to bury their heads in the sand, or are crazy enough to believe that the likes of Greece will be able to pay off their own debts without help.
This move has initially given a small spike to GBP/EUR reaching back into the 1.14’s briefly this morning before retracing back lower. The main disappointment for me is that Sterling hasn’t been able to capitalise at a better pace, which may be due to our tight links with the rest of Europe.
As we said yesterday it’s safe haven currencies that have absorbed most of the benefit with both the USD and CHF strengthening further. It seems that no one really knows just how far the Swiss Franc will go, although things are getting tough on the ground in Switzerland with many exporters worrying about losing their competitive edge.
Although the market is extremely volatile at present EUR/USD should remain under pressure this week and this could still help Sterling achieve levels of 1.1400 against the Euro although UK data itself is in relatively bad shape with the majority of data recently coming in worse than expectation.
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