GBP/EUR

Pound and Euro: In the financial press over the weekend, many are talking of further downside risks to the Euro over growing concerns that Greece will not deliver the required austerity measures as demanded by the bigwigs in the EU. Greece’s Papandreou came on the wires over the weekend highlighting that Greece is not asking for a bailout, and that it has the means to tackle its deficit. Whilst this may be the case, Greece has supplied little in the way of information as to how it intends to go about reducing spending. “Disappointment risk” still remains, and there are a few increasingly prominent voices airing concern over the future of austerity in the southern EU states. In a Bloomberg poll, economists downgraded their medium to long term outlook for the Euro, stressing that reduced output from Spain, Greece, Ireland and Portugal is likely to drag the single currency further towards historical lows. One economist polled even suggested an approach toward parity. Trading this week is likely to centre on news flows from the EU surrounding this ongoing drama. Whilst the Euro wasn’t in flavour last week, it performed better than the pound by a long stretch, trading up from 0.8664 to a high of 0.8816 on Friday, where we open this morning.

- I expect a range today in the GBP/EUR rate of 1.1300 to 1.1415