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Norwegian Krone slumps versus major peers on last weeks explosion

The pound looks likely be under pressure this week as we head towards Tuesday’s key GDP numbers which are not expected to paint a pretty picture. If we look at the pounds position against the euro and dollar however, you may be forgiven for thinking we are holding our own ground fairly easily, not so. With the US debt talks braking down over the weekend and Moody’s cutting Greece’s rating, both the dollar and euro have fallen ver¬sus most other currencies, making the pounds position against both currencies look better than it is. Ahead of the announcement of Britain’s key GDP figure, a former BoE economists said the UK would have to become used to a ’new normal’ where growth would hover between zero and one percent. The warning came as the consensus forecast from economists predicted the GDP numbers have risen by just 0.2% q/q from April to June, after being flat over the previous two quarters. 
Data 09.30: BBA Mortgage Approvals 31.3k from 30.5k.   


The euro dropped for the fist time in three days after Moody’s slashed its long term foreign currency debt rating on Greece to Ca from Caa1, warning that a planned debt swap would constitute a default. The announced EU programme, implies that the probability of a distressed exchange, and hence a default, on Greek government bonds is virtually 100%. It comes after another credit agency, Fitch, warned that it too expected the deal would mark a “selective” debt default by Athens. The headlines on Moody’s rating have spurred selling the euro and the ratings cut has helped remind us that the Greek issue is a cause for risk aversion. Looking ahead, the EU programme and proposed debt exchanges will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden. The support package for Greece also benefits all euro area sover¬eigns by containing the severe near-term contagion risk that would likely have followed a disorderly payment default or large  haircut on existing Greek debt.
No major data.


The dollar slid toward a record low versus the Swiss franc and traded sideways against the pound after US law¬makers failed to agree on raising the nations $14.3 trillion debt ceiling, boosting the odds of a default as soon as next week. The greenback remains under pressure as Republicans prepared to force action on a shorter-term extensions of the debt limit than President Obama has requested, spurring demand for the yen and Swiss franc as havens over the dollar. America may lose its top credit rating as early as August because of the risk that Congress will agree to limited reductions in the budget deficit compared with $3 trillion to $4 trillion in cuts rec¬ommended by S + P and Moody’s. While clearly a blow to US prestige, the impact on the dollar may be muted. Central  banks will not sell treasuries given their need to hold foreign exchange reserves in liquid assets.
Ongoing discussions by US lawmakers as they try to agree decision raising borrowing. No major data.


• The Norwegian Krone slumped versus most of 16 major peers after last weeks explosion rocked Oslo. The Krone fell 1% versus the dollar and a two week low against sterling.


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GBP/USD                        1.6286

GBP/EUR                        1.1350

EUR/USD                        1.4356

GBP/JPY                         127.36

GBP/AUD                        1.5065

GBP/NZD                         1.8839

GBP/ZAR                         11.1235

GBP/CHF                         1.3152

GBP/CAD                        1.5485

GBP/SGD                        1.9672

GBP/THB                         48.50

GBP/HKD                        12.6887

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 6917      


For more information