Greece teetering on the edge of bankruptcy

With no data released yesterday Sterling remained broadly range bound against its major trading counterparts. In the short term we can expect Sterling to be driven by the upcoming general election, and ongoing speculation regarding a potential interest rate rise. Uncertainty regarding the outcome of the election in 2 weeks (especially as a hung parliament is looking increasingly likely) should cause GBP weakness moving forward. Conversely, if one party pulls ahead in the polls towards a majority, we should see stability return to the market and GBP strength as a result. Yesterday GBP/USD failed to break through the tough resistance at 1.4980 IB, and without a consolidation above 1.50 IB we could see the rate easily slide back towards support levels around 1.4568. GBP made further headway against the Euro, reaching 1.3944 IB before retracing back below 1.39 IB. Today sees the release of the influential minutes from the latest Bank of England policy meeting, which will give a valuable insight into which of the central bank members may be shifting their stance on current UK monetary policy. The minutes can often have a significant effect on the market as they give clues to how close the committee may be to enacting an interest rate rise.

The Euro continued to struggle yesterday as Greece remained at the forefront of market unease. This factor coupled with the downgraded German ZEW economic sentiment paints a bleak picture for the troubled Eurozone moving forward. The focus is still firmly focused on Greece, who many are led to believe could default by the end of April. Greek policy makers are scrambling around in yet another meagre attempt at negotiating an extension to looming payment deadlines. The implication is that the patience of other Eurozone finance ministers is running out, with many unlikely to panda to the latest Greek plea deal. Elsewhere, the aforementioned German data indicated that optimism regarding the German 6-month economic outlook had fallen for the first time since October. ZEW stated that the world economy was dampening German export prospects and reducing the potential for further improvement moving forward. Many Eurozone policymakers are beginning to believe that the situation with Greece is making a mockery of the structure and procedures of the Eurozone, and the region as a whole. There are increasing calls to cast adrift the deadwood, and many believe the Eurozone will benefit as a result. With no data released from the region today, the Euro will therefore continue to remain price sensitive to headlines from Greece.

With no data was directly released stateside, the US Dollar traded in a narrow range against most majors yesterday. The US Dollar is still in a very strong position moving forward, with many market participants expecting a FED rate rise to come to fruition in October, meaning one can’t help but think the greenback still has gas in the tank. EUR/USD managed to claw back losses on the day, reaching a low of 1.0658 IB before bouncing back to end the session around 1.0770 IB. Potentially market moving data released stateside today includes Existing Home Sales, a leading indicator of economic health owing to the fact that the sale of a home triggers a wide-reaching ripple effect. The figure is expected at 5.04M, against 4.88M previously, and if realised will be the highest print since November. Elsewhere the Crude Oil Inventories data is released, which can be significant due to them having both inflationary and economic growth implications.