Daily FX Comment EUR/USD & GBP/USD 31st January 2012
EUR/USD Overview
A stalemate regarding Greece’s attempt to strike a deal with private bondholders reignited fears over the stability of the euro zone and sent investors out of the single currency. There were also reports of EU leaders getting increasingly frustrated about the pace of reforms in Greece and also Portugal. So even with government yields in Spain and Italy falling recently, the euro lost 70 pips versus the US dollar to $1.3143. As many now see the euro zone economy slipping into recession there’s growing possibility the EU officials assembled in Brussels will step up their efforts, urging Greece to deliver a solution.
Moving Averages: 9 day 1.3079 14 day 1.2962 40 day 1.2993
GBP/USD Overview
The UK sterling dropped 11 pips versus the greenback yesterday to $1.5709 following a report from property market researcher Hometrack saying the UK home prices remain under downside pressure. However, the decline was less than the euro’s as global markets see the British economy in a better situation, given the independence of its currency. A potential default in any of the euro zone members is likely to trigger a rush into safe haven currencies, hurting the pound on the very short term. But it would be interesting to see at which point the UK currency might attract some interest as an alternative.
Moving Averages: 9 day 1.5641 14 day 1.5536 40 day 1.5546
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