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Euro still falling on Greek debt issues


US Dollar:
Global sentiment has turned lower Friday as investors turned against seemingly positive corporate results. The dollar found support against the majors, as weighing in the background is the European fiscal issue, while com¬ments from a Fed official also disrupted the week’s enthusiasm. The Fed’s Yellen said the US economy is likely to grow about 3.5% this year. Unlike other post World War 2 recessions, this time around the US economy is likely to recover at a more moderate pace, Yellen said. In past recessions the Federal Reserve has had more leeway to lower interest rates to support a recovery. But with the Fed’s federal funds rate currently at essentially zero, the central bank cant lower rates any further.  
Data 113.30: Building Permits expected at 0.63m from 0.64m.     

Sterling’s strong performance in currency markets yesterday has been tarnished somewhat this morning as risk sentiment decreases globally. Yesterday saw the pound rally against both he dollar and euro, with cable trading over the $1.54 level on the back of a height in global risk and a sell off for the greenback. A Fed spokesman strengthened views for low rate policies in the US to continue for a long time. Players who accumulated dollar longs on expectations for a bullish market ahead are now selling back, helping the pound’s performance against its US counterpart. The pound also took full advantage of rumours surrounding the euro on the back of worries regarding Greece’s debt issues, with the UK currency roaring back over the 1.14 level. With the first televised debate in the UK being aired last night, the UK election will continue to have an effect on the value of sterling. The Centre for Economic and Business Research, a leading think tank, has increased its forecast of economic growth in Britain, but the predictions were based on Conservative government being in power!
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The euro took a tumble in the currency markets yesterday, falling against sterling and the dollar, mainly because of the debt uncertainty in the eurozone. The single currency did find some relief on an announcement that Greece would meet with the IMF on Monday to discuss the financing plan the IMF has offered in conjunction with the EU. The discussions represent a step toward the first sovereign bailout in the history of the eurozone, amid growing doubts that Greece can continue raising money on the financial markets. But investors are still hungry for details of how the plan might work, and without those details, the euro will remain under pressure. Morgan Stanley has warned that the Greek debt crises is setting off a chain of events that may prompt a Ger¬man withdrawal from the eurozone, with grim implications for investors caught off guard. Data due today in¬cludes the final eurozone CPI figure for march.
Data 10.00: E/Zone CPI expected 1.5% unchanged and E/Zone Trade Balance expected 5.1B from 7.0B.

• Currency movements are helping push crude lower on Friday. Nymex May contract was down 80 cents at $84.71 per barrel.
• Spot gold is at $1,155.90 a troy ounce, down $2.90 in tracking the lower EUR/USD with little activity ei¬ther way.

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GBP/USD 1.5415
GBP/EUR 1.1390
EUR/USD 1.3538
GBP/JPY 142.79
GBP/AUD 1.6554
GBP/NZD 2.1676
GBP/ZAR 11.3462
GBP/CHF 1.6327
GBP/CAD 1.5451
GBP/SGD 2.1187
GBP/THB 49.54
GBP/HKD 11.9644 red-down; blue-up (snap shot)


These rates are for indication purposes only.


For more information or to get the latest spot rates contact:

John Paul Georgiou
Senior Foreign Exchange Broker
+44 (0)20 7959 6851