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The Pound gained some support from the OBR report, and has managed to keep above 1.47 into this morning. Sterling has also managed to make some modest gains against the single currency, pushing up towards 1.21 even as the Euro itself benefited from some decent economic data…read more

As the election was held last Thursday the MPC meeting has been put back to today, although as there is to be no change in rates or policy it will add little to the picture. There is little else out today to exercise the markets, so they will be left dealing with the fallout of the election and the Greek crisis…

Sterling has stayed buoyant against the Euro, and is likely to continue to do so especially if the Conservatives keep stretching their lead in the polls in the run up to Thursday, and the prospects of the Greek bailout continue to be uncertain.

May day is normally a day of left wing protest around Europe and this year the Greek protesters will have something to focus on, the scale of the protest may weigh on the Euro over the weekend, although a bail out next week should help the single currency.

Greece’s fiscal deficit is a problem that will not go away, it seems that every summit and agreement just leads to more issues down the line. The response from the EU has been lacklustre, and uncertain, with a lack of clarity on when it could be used, how much it would be for, and what financial restrictions it would impose on Greece…

Greece’s credit rating hasn’t proved to be as resilient as the UK’s, and it’s credit rating has been downgraded several times so that it now has to pay huge sums to borrow money- we are talking about the sorts of interest rates that you see quick loan companies advertising in the back of newspapers. Greece’s issues are compounded by the inflexibility of its labour force to adjust to austerity measures leading to strikes and general unrest.

Foreign exchange is like a bouncy castle if each currency and even country represented a tube in the castle floor – you cannot put pressure in one area without it effecting A) The area with least resistance on it and B) To a lesser degree the rest of the castle.

It seems that just as the parties want to stoke up the fears of a hung parliament, the markets themselves are becoming more sanguine about the issue. The speculative positions in the market, which were heavily betting on the Pound weakening over the election period, have slowly been drawn back in over the last four weeks, even as the prospects of a hung parliament look ever more likely. If the polls stay balanced up to the election next week, then it may test the relaxed stance of some investors…

The Pound has actually performed well over the last week, with not even last Friday’s weak GDP figure making much of a dent. The expectations were for a 0.4% growth figure, but with the poor weather in January the risks were that we would get a lower figure, and we did, with the initial estimate coming in at just 0.2%.

he Pound has continued to push higher against the Euro, almost touching 1.1550 overnight, although it has fallen back to sit just above 1.15 this morning. The Euro has continued to struggle, and Greek spreads have continued to widen, even as Greek officials meet with the EU and the IMF to hammer out the details of the proposed bailout…

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