Greece is suspected to be near completion of mandates set by its lenders to obtain the additional €130 billion bailout money needed to avoid defaulting next month. Despite this, the country’s lenders have been shifting to concern on oversight for the country’s continued implementation. Germany has overtly expressed doubt over Greece following the new austerity guidelines agreed upon. Consequently, tensions have been increasing between Greece and other Eurozone officials on their increasing commitment demands as well as a pushback for the bailout decision to next Monday. In addition to this, some Eurozone officials have even slighted the occurrence of a Greek default, creating further discord.
On the opposite, the French Prime Minister Francois Fillon directed focus toward Europe stating that the lending officials must now make good on their previous agreement as Greek officials have done what was requested of them. "We must do absolutely everything so that there is not a default by Greece, that would be dramatic for Greeks themselves and dramatic for Europeans," Fillon stated. "The bankers accepted giving up 70 percent of the loans they made to the Greeks, the Europeans must now keep their commitments, that is the position that France is defending."
In other European news, the Office for National Statistics reported United Kingdom (U.K.) retails sales rose January (2012) by 4.4% in the month with a 2.0% volume increase. The increase in volume was largely due to non-store retailing, other stores and stores that were primarily food. The year on year price comparison showed inflation was 2.2% for January 2012 and was the lowest deflationary/inflationary price change seen since November in 2009 at 01.0%.
With positive news out of the U.K. and uncertainty surrounding Europe, we expect to see further downside in the EURGBP. The pair has dropped over 100 pips in the last two days. The pair broke below its support at 0.8350 and is now testing fresh lows near 0.8275. If it closes below 0.8275, we expect the pair to target 0.8225 if the ambiguity in Europe continues.
Eugene Ross, Analyst
Admiral Markets
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