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19 Feb 2015

Focus remains firmly on Greece/EU talks as EUR sinks

United States Dollar: All eyes remain well and truly focused on what’s happening with Greece and the Eurozone. There’s lots of rhetoric going around at the moment but ultimately no agreement has been reached between creditors and the Greek government. There’s still a real chance that Greece could pull out of the Eurozone if the talks break down again today. Eurogroup finance ministers will meet in Brussels at 3pm to decide whether or not to accept the bailout extension plans proposed by Greece yesterday. GBP/USD has tracked EUR/USD lower throughout the last 24 hours and opens this morning at 1.5405. A cautious approach to FX trading is likely to ensue this morning, even in the wake of UK retail sales data due at 9:30.

We expect a range today in the GBP/USD rate of 1.5180 to 1.5400

Euro: EUR/USD has fallen further over the last 24 hours. It was hit hard by the news that Germany had rejected the proposed bailout extension plans put forward by Greece yesterday, despite a few concessions from Greece’s original plans. It was described by one German finance ministry spokesman as “not a substantial proposal for a solution”. In other news yesterday, the ECB announced their first ever set of minutes from the last meeting. They didn’t really surprise. The central bank’s governing members were unanimous in their vote to purchase government bonds, although the minutes did say that they had considered buying corporate bonds. The single currency is likely to trade on the back foot throughout most of this morning unless we hear any major positive rhetoric or unless we hear that parties are moving closer towards some kind of concrete solution. If talks take a bad turn and no agreement is reached by the end of the day, or by the end of the weekend, we may see carnage in financial markets come Monday morning. Away from this saga French and German Manufacturing and Services PMIs have come in a bit mixed this morning and so haven’t really exerted any positive influence over the currency. Naturally, GBP/EUR has continued to push higher and opens this morning at 1.3575 having traded to a high of 1.3617 already during the overnight session.

We expect a range today in the GBP/EUR rate of 1.3520 to 1.3640

Aussie and Kiwi Dollars: AUD/USD ticked higher overnight although not by much. NZD/USD has similarly traded a steady range as investors and traders wait out for any final decision and agreement between Greece and its creditors. GBP/AUD and GBP/NZD have also been quiet and open in London at 1.9640 and 2.0385 respectively.

We expect a range today in the GBP/AUD rate of 1.9520 to 1.9760

We expect a range today in the GBP/NZD rate of 2.0280 to 2.0500

Data Releases

AUD: No data

EUR: Eurogroup Meetings

GBP: Retail Sales m/m, Public Sector Net Borrowing

NZD: No data

USD: Flash Manufacturing PMI

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