Pound Euro Exchange Rate Steady Despite German Chancellor Merkel?s Failure To Offer An Olive Branch To Greece

Published: Wednesday, 10 October 2012 09:00 BST - Written by Ben Hughes

STORY LINK Pound Euro Exchange Rate Steady Despite German Chancellor Merkel?s Failure To Offer An Olive Branch To Greece

German Chancellor Angela Merkel braved tens of thousands of angry Greek protestors during her visit to the troubled Hellenic state’s capital yesterday. Merkel pointedly failed to announce any loosening of the harsh austerity measures which the Greek populace feel have been asphyxiating them over recent years. In truth, an olive branch was never likely to be forthcoming from the leader of Europe’s premier economy. Any easing of the stringent tax hikes and spending cuts which the Greek people have had to endure would have to be jointly agreed by the EU/IMF/ECB ‘Troika’ – the eurozone is not yet a totalitarian German state. However, this fact appears to have passed the Greek protestors by.

The euro remained relatively steady against Sterling in the latter part of yesterday’s European session, in spite of the vehement protests in Athens. The pair remained just above the 1.2400 level – a fact which disappointed a large proportion of investors holding Sterling-denominated assets, given that yesterday afternoon also saw the release of the closely-watched NIESR GDP Growth Estimate for the UK, which projected that Britain’s economy expanded by a healthy 0.8% in the three months to the end of September. The market remains wholly unconvinced regarding Britain's future economic prospects.

Elsewhere, yesterday’s session was notable for price action on Cable – the GBP USD exchange rate dipped below the 1.6000 level for the first time in several weeks as investors continued to steer clear of risk-laden assets. The flight to safety confirmed the Greenback’s continued status as the global market’s reserve currency of choice. Moving forward, consecutive closes below 1.6000 would confirm the current Bearish outlook for GBP USD. This evening’s Federal Reserve Beige Book Economic Survey could tip the scales in either direction and should be closely-monitored.

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