GBP find support in GDP
This morning saw UK Q3 data add support to GBP in that it confirmed we are out of the double-dip recession. Furthermore investment and services data looked ‘surprisingly’ positive. Greece’s institutional lenders reached a deal early Tuesday in Brussels that is expected to pave the way for the country to receive almost €44 bn euros of financial aid, while bringing its debt down to a sustainable level.
Euro-zone finance ministers, the European Central Bank and the International Monetary Fund — Greece’s three main creditors, often called “the Troika” — reached an agreement in a meeting that ran into the morning hours. They eased the terms on emergency aid for Greece, declaring after three years of false starts that Europe has found the formula for nursing the debt-stricken country back to health. In the latest bid to keep the 17-nation euro intact, the ministers cut the rates on bailout loans, suspended interest payments for a decade, gave Greece more time to repay and engineered a Greek bond buyback.
On the FX market, GBP/USD traded lower for much of the session, with price action somewhat subdued as market participants looked forward to an official statement from EU ministers after yet another meeting on Greece. The next major event for the UK will be the Autumn Statement by the Chancellor George Osborne, where he is set to reiterate his pledge to return to prudent fiscal house management. On that note, according to the Institute for Fiscal Studies, UK Chancellor Osborne may have to extend his austerity program by another year to 2018. Also, it is worth remembering that Moody’s recently said that it will revisit the AAA rating and outlook in the first few months of 2013 to assess the impact of these challenges and of the government’s upcoming autumn Statement.
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