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GBP/USD trading above 1.5850

GBP/USD trading above 1.5850

The German parliament votes today to endorse the new Greek bailout package. A positive outcome is expected despite additional pressure following the G20 decision at the weekend. No additional funds will be provided by the IMF until Eurozone countries increase the size of their own firewall.

Meanwhile, the second release of UK GDP for Q4 2011 was unchanged as expected, with a fall of 0.2% on the previous quarter. The additional detail revealed that an increase in household consumption and trade was not enough to offset a sharp drop in investment and stock building. Household consumption made a welcome return to growth for the first time in 12 months with an increase of 0.3%, while exports provided a major contribution with an increase of 0.7%.

A continuation of the broad increase in risk sentiment and better than expected French consumer confidence drove EUR/USD to a 3 month high on Friday of $1.3486. Similarly, sterling has gained against the US dollar with GBP/USD trading above $1.5850 early this morning.

Emerging-market currencies that are close to the Eurozone are all under pressure as the Group of 20 nations’ hesitancy towards further bailouts for European countries weighs on sentiment. PLN, CZK and HUF are all under particular under pressure against the EUR.

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