Market disappointed by lack of deal on Greece
The Euro traded sharply lower as European finance leaders failed to reach a decision on Greece during today’s meeting. The chairman of the Eurogroup Jean-Claude Juncker said Greece has met prior actions satisfactorily and ‘credible’ ideas to bring down the debt levels were identified. Juncker also said there were no major political disagreements during the meeting. The meeting will resume on November 26.
The BoE minutes at the November meeting rules out rate cuts and The Bank of England Monetary Policy Committee voted eight to one in favour of leaving quantitative easing unchanged. Only one MPC member voted for any extra QE at the November meeting, and he only opted for a further stg25 billion. The MPC also
looked again at the case for cutting the Bank Rate below 0.5%, but this time concluded, in light of BOE staff research, that it was unlikely to want to cut it in the foreseeable future. Market pricing has suggested a further cut in the Bank Rate is seen as likely. In its November Inflation Report the BOE’s market rate assumption was that the Bank Rate would fall to 0.3% by Q2 2013 before rising again to 0.4% by Q2 2014.
On the FX market, GBPUSD started the session little changed, with safe-haven related flows following French sovereign rating downgrade supporting the pair ahead of the eagerly awaited release of the most recent policy meeting minutes on Wednesday. In terms of technical levels, supports are seen at the 200DMA line at 1.5853 and then at 1.5828. On the other hand, resistance levels are seen at the 21DMA line at 1.5982 and then at 1.6020.
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