EU Summit continues from yesterday

US Dollar:

A continued rally in the dollar against the majors has come to a pause for now, as markets digest the news of a financial aid package for Greece. This may however be a short break, as EUR/USD seems likely to fall further on a growing sense that the common currency is facing fundamental structural problems highlighted by euro¬zone member divisions on fiscal matters. Of course the yen and dollar have their issues, but the problems fac¬ing the euro are so fundamental that you now have people even talking about a possible fall to parity between the euro and dollar. Against the pound, the dollar also seems for now to remain the top dog in the run up to the UK election, possibly in the next 5-6 weeks, which looks set to keep the pound under pressure. Because of the on-again, off-again nature of the possible rescue for Greece, the dollar is probably the best currency to hold amidst all of this, as the clouds hanging over the US economy continue to part.
Data: GDP Final q/q expected 5.9% unchanged.

Pound:

Sterling has been taking full advantage of the recent pressure the single currency has found itself under, but a small pullback in the euros favour has now been seen with the news of a financial aid package for Greece being digested by the markets. Yesterday saw sterling continue its steady climb on the euro, helped by better than expected retail sales figures, but the end of the week has seen the pound weaken across the board. Cable has remained under pressure most of this week, and this morning see’s the pound continue to fall against the green¬back, as the dollar remains the currency most investors seem happy to hold. The fall out from the budget also continues to rumble on as it is digested by financial analysts, with Chancellor Alistair Darling saying on the BBC if Labour is re-elected, public spending cuts are expected to be above those implemented by PM Thatcher in the 80’s.

Euro:

After several false starts, the eurozone appears to have a deal on a backup aid package for Greece should its fiscal problems worsen, and investors are cautiously responding so far. But before euro bulls get to carried away, the news that Eurozone leaders had agreed a rescue package did little to inspire risk appetite, both in equity and currency markets. The bailout does little to address the underlying problem as it will only be available
if Greece can’t raise money in the debt market. Everyone knows Greece can raise money, but the issue lies in the cost of doing so. The euro is higher against the dollar and yen, reversing earlier lows, but the single cur-rency is still struggling to get back on top against sterling, although the pound isn’t exactly setting the currency markets alight!
Data: EU Summit continues from yesterday.

General:

• Spot gold is at $1,092.60 a troy ounce, up $1.60 from yesterday.

• Portugal Parliament approves support for Governments Austerity plan after credit rating agency ’Fitch’ downgraded its AA rating to AA– earlier in the week.

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GBP/USD	1.4847
GBP/EUR	1.1102
EUR/USD	1.3383
GBP/JPY	137.37
GBP/AUD	1.6355
GBP/NZD	2.1007
GBP/ZAR	11.0369
GBP/CHF	1.5854
GBP/CAD	1.5208
GBP/SGD	2.0843
GBP/THB	48.07
GBP/HKD	11.5205 red-down; blue-up (snap shot)