It’s the start of the new week but there’s no end to the drama. The Eurozone is now beginning to look like an Eastenders plot with most onlookers asking if so much drama can happen so quickly and continue for so long. Standard and Poor’s sword was in full swing on Friday as they handed out nine credit downgrades, most notably that of France being stripped of its AAA credit rating by one notch to AA+.
Greece are scrambling to try and resolve their debt crisis this week as they look to re-structure their debt which will leave them with a debt to GDP value of 120% as an end result. The longer this situation continues the more I feel there can only be one end result which is the end of the single currency.
This week will be a strong test for the Euros resolve as I feel further pressure is due for the single currency. If I was to be brutally honest I would suggest the powers that be get together and spend their time discussing how they are going to break up the Euro and go their separate ways rather than how to solve the black hole that is the European debt crisis.
So the week ahead looks bleak for the single currency although it may get some respite today as the US celebrates Martin Luther King Day. Orders to buy Euros at, or just over the 1.20/1.21 mark look good for GBP/EUR. However, with EUR/USD looking to head lower it does suggest that GBP/USD will follow suit and drift lower, albeit at a much slower pace
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