GBP to EUR: The euro under pressure as pound makes advances back into physiologically significant territory

Thursday, 16 February 2012 15:43

The GBP to EUR exchange rate is currently 0.47% higher on the day at 1.2065.

This represents a good comeback by the GBP, but a great deal of credit for the move should actually rest with the weakness in the EUR.

The movements of the EUR-USD exchange rate have helped drive direction in GBP-EUR. 

Today, the eco calendar in Europe is very thin. Markets will keep an eye on the bond sales of Spain and France. However, of late auctions were no factor of importance anymore for FX trading.

In the US, the calendar is better filled, with the PPI, the jobless claims, housing starts and permits and the Philly Fed survey all scheduled for release.

"We continue to keep an eye on the activity data (especially the jobless claims) to see whether the rebound of the US economy remains on track. At some point this might come to support the dollar. However, at this stage, Greece remains the dominant factor for EUR/USD trading," say KBC Markets.

With respect to the Greek debt deal, it is impossible to try to predict the political U-turns of all parties involved ahead of the next Eurogroup meeting on Monday.

This is nothing less than a high level poker play. The official talk remains that progress has been made, but it is clear that there is immense distrust between Greece and a big part of the other EMU countries.

The visibility on the issue is almost zero. One can make the point