GBP/EUR Investors Await News On Greek Bailout Funding

Published: Wednesday, 21 November 2012 09:00 BST - Written by David Woodsmith

STORY LINK GBP/EUR Investors Await News On Greek Bailout Funding

Discord and indecision marked yesterday’s session in the currency markets. A summit in Cambodia, attended by US President Barack Obama, descended into a bitter row between China and the Philippines regarding the ownership of a disputed string of Islands in the South China Sea, whilst China’s long-standing argument with Japan over the sovereignty of another set of islands remained an ever-present source of angst in the background.

Meanwhile in the eurozone, a key summit of the eurogroup of Finance Ministers got underway. Whilst it would appear unlikely that the European policymakers will opt not to grant Greece its next €30bn+ slice of bailout funding, nagging doubts remain at the back of the minds of many institutional investors that such an outcome might come to pass.

Elsewhere, Israel’s bloody bombardment of Hamas interests in Gaza showed little sign of relenting. Ordinarily, such geo-political tensions would cause global stock markets to register significant losses. This was certainly the case during the first half of Europe’s equities session. However, the losses were largely reversed when New York opened thanks to some highly encouraging US Housing Market data. The latest US Housing Starts data, released at the start of the North American trading day, surprised analysts by showing that the level of new home building in the States had risen to its highest level for four years last month. Investors took note of this key leading indicator and global appetite for risk flooded back into the marketplace.

However, positive appetite for risk is by no means guaranteed to last into today’s trading session, meaning that the safe haven US Dollar could make a comeback at very short notice. The key risk event of note to look for today comes in the form of the latest Bank of England monetary policy committee minutes. Following higher than expected UK CPI Inflation numbers earlier this month, the closely-watched memos could reveal that more QE is off the menu for the UK, in the near-term at least. Such an outcome would afford Sterling some much-needed breathing space.

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