Euro Bosses Agree Support For Bond
Yesterday was a good day for those sending money to the Eurozone as the pound to euro exchange rates spent much of the day near month high levels. The Euro was under pressure, as it has been much of the week, following comments by a German official stating any kind of resolution at the EU summit in Brussels would not be a quick one. This sent investors into risk averse trading patterns with the US dollar being the main beneficiary gaining against the pound to a two week high. Thus, a typical “currency see-saw” scenario.
This was despite GDP data from the UK showing GDP for Q1 of this year as negative adding more fuel to the fire over whether the Bank of England will add to the QE program next week. The fact is markets have largely priced this in already so we are unlikely to see much change if this does happen next week.
We were expecting more of the same trading levels today, up until the EU summit came up trumps for the Eurozone. The leaders have agreed to give the support needed to Italy and Spain regarding their bonds which up to now have had spiralling levels of interest, making their borrowing costs unsustainable. Growth is the key for the zone and these new measures are designed to help ease pressure within the zone and helping to improve growth.
This was announced at 4am UK time, during Asian trading where we saw a big jump for the Euro across the board, gaining over 1% against the pound and the dollar. The pound has gained some of this back so we will see how the European markets and latterly the US markets take the news…. will it be felt enough is being done?
Today we have a raft of EU data on money supply and CPI while in the UK we have the financial stability report along with a speech by BoE governor Mervyn King. Will he talk the pound up or down? It’s usually the latter and with month end today which often brings profit taking so we could see some volatility towards the end of European trading at 4.30pm. all in all well worth keeping in touch with your broker at Currency Index if you have a transfer to make in the coming week.
While Germany were leading the talks in Brussels deciding on the future of Italy and Spain, over in Poland it was quite the opposite. If only Italy’s finance ministers played the finance game as well as their footballers the beautiful game, they would probably be in a lot better position as a country. At least for now the Azzurri are giving the Italians something to smile about with a 2-1 win over the Germans to go into Sunday’s Euro 2012 final against Spain, much to the dismay of Angela Merkel. Forza Italia!