The pressure on the Euro has become immense since Greece was downgraded and the Eurozone refused to step in to help. Traders fear a Lehman Brothers type scenario where Greece defaults on its debt and Portugal, Spain and Ireland are forced to follow suit as the carpet is pulled beneath them.
A report in the telegraph over the weekend suggest the European Central Bank (ECB) are preparing legal ground in the event a Euro member tried to leave the Eurozone breaks up following the Greek crisis.
The fact that EUR USD has fallen over 7.0% since December will not worry the ECB one little bit. They have been attempting to talk the euro down for most of last year to help their exporters pull the Eurozone from recession.
The pound on the other hand has had a great weekend. December CPI inflation data released Monday was 2.9%, much higher than the Bank of England 2.0% target and very close to the number which requires BoE Governor Mervyn King to write a letter of explanation to Chancellor Alistair Darling. This was the largest one-month rise since April 1991.
The next number to surprise to the upside was UK December unemployment which fell by 15.2k, the second consecutive monthly decline.
Euro buyers have therefore been presented with the best levels to buy in 4-months after a 4.5% bounce since last week.
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