Euro drops as Greece talks stall

This week got off to a quiet start with no economic data for the majors. GBP/USD corrected downwards from last week’s gains and GBP/EUR suffered losses in the morning before recovering the late in the afternoon as the Euro came under some selling pressure. This was likely caused by news on how talks had gone over the Greece debt crisis as ministers met to further discussions after lunch. The Greeks have 12 days to renegotiate their financial position with the Euro-zone, and as of yesterday these talks are already ‘on hold’ as the Greek finance minister has refused to agree to €240bn bailout plan calling it ‘”absurd and unacceptable”.

It is expected that another meeting later in the week may be arranged but there are clearly difference of opinions on how to move forward and this was seemingly reflected on a small drop in the Euro’s value after the meetings. Greece still maintains that it wishes to come to an agreement and is currently looking for a bridging loan to keep the country going for 6 months which will allow for €7bn worth of bonds to mature which will go towards paying off some of their debt. The main problem is that Greece is lived beyond its financial means for so long that no one is willing to lend them any more money.

Today sees the first major data announcement for the week beginning with UK inflation figures at 9:30am. It is unlikely that there will be any major surprises in this following the inflation report from the Bank of England last week that detailed expectations of a sharp drop in inflation over the coming months. At 10am we switch to the Euro with Economic Sentiment ZEW Survey for both Germany and the Euro-zone as a whole. Expectations are for a good improvement since last month.