Euro discussions still setting the tone

A mixed and relatively subdued day for the pound yesterday with very little economic data releases across the board, markets were focused on pre Euro Group meeting leeks surrounding Greece.

The euro was the main winner of the day gaining nearly ½% against both the pound and dollar as it emerged that ministers are hopeful of an agreement on Greece’s terms for their current debt. There does seem to be a mixed opinion as to whether or not an extension to the time already allocated for Greece to pay back debt will be granted at today’s meeting but it does seem inevitable that an agreement will be reached sooner or later. The stock market was boosted by these murmurings and investors were more easily swayed to piling into the euro, seen as a more risk averse currency.

Late last night Moody’s downgraded France 1 notch and this morning we have seen slightly weaker than expected German PPI data so markets are in limbo at the moment and headlines coming out from the Euro Group meeting which starts this morning are likely to be the main market movers. Tomorrow on the other hand sees the release of the BoE minutes from this month’s meeting where both interest rates and QE policy was left unchanged. There had been calls for further QE but a raft of positive UK data maybe persuaded members to re-think. The minutes will shed some light as to how close they came to increasing QE and will give us some guidance as to what move, if any, they will make in December.

We are likely to see some volatility over the coming days so do keep in touch with your account manager at Currency Index to make sure you don’t get surprised by the markets.