David Cameron and Mark Carney meet to discuss Greece and the EU

In a day that saw no UK economic data releases, the pound traded in a 1 cent range versus both the euro and the US Dollaryet again. Amid the turmoil in Greece and the growing prospect of its exit from the eurozone, sceptics from the UK believe that a Greek fallout will help the case for Britain leaving the EU. The Prime Minister, David Cameron, held talks yesterday with Mark Carney, the Bank of England governor, as fears grow that the financial sector could be vulnerable to the wider contagion that might be triggered by a Greek exit from the euro. It has been suggested by some MP’s that if Greece does leave the eurozone it could make arguments for Britain to stay inside the 28-member union more difficult.

In other news, the British Chambers of Commerce haswarned that Britain is experiencing a “two-tier growth” and has urged the chancellor to use the budget to revive the flagging manufacturing sector. Two-tier growth can be seen in the modest expansion within the services sector, combined with the slower growth seen in the manufacturing sector. The UK is too reliant on consumer spending and the decelerationin manufacturing is becoming a concern; these fears, as well as the contagion from a Grexit,are limiting the pounds advances against the euro and the dollar at present.

This morning we see the release of industrial and manufacturing production figures, which could further highlight the above mentioned issues. Later this afternoon we have the NIESR (National Institute of Social and Economic Research) growth estimate, which is closely watched before the official announcement released next month.

The resounding ‘no’ vote in the Greek referendum yesterday significantly increased the chances of a Greek exit of the eurozone. Whilst not having the immediate effect many market experts predicted, we did see the euro slowly weaken off against its major partners in the region of 0.4%. The actual legality of the referendum continues to be questioned, with Brussels stating the referendum was “neither legally or factually correct”.

In a move to help ease the progress of any new talks, Mr Tsipiris forced out his outspoken finance minister YianisVaoufakis. He has been replaced with Euclid Tsakalotos, an Oxford educated, son of a civil engineer, which seems to have helped alleviate some of the fears of a euro sell off for now.

Today holds the EU Summit, where all heads of state are meeting following the results of the Greek referendum. Once again the markets will be eagerly awaiting news from Brussels to see if a new bailout programme is even offered.

The fundamentals leaving Europe this morning were not overly positive with German industrial production sharply falling 0.9% m/m and the French trade balance further weakening by 700 million to negative 4 billion. Both these figures are disconcerting as one would have expected both France and Germany to take advantage of the weaker exchange rates to boost their exports.

Following the unexpected 61.3% ‘No’ vote in the Greek referendum, the dollar opened up on the front foot in the Asian session, reaching daily lows of 1.0990 (IB) against the euro despite finishing over 1.11 (IB) on Friday evening. As we entered into European trading hours, the dollar seemed to give back some of its overnight gains as demand for safer assets seemed to fade on hopes that Athens would have some extra leverage in its negotiations with the troika. Data releases throughout the day also did little to help the currency, with The Markit Non-Manufacturing PMI coming in at 54.8, showing the slowest rise in the US service sector for five months. GBP/USD ended the day 0.3% higher over 1.56 (IB), and EUR/USD only marginally higher despite heavy gains in the morning.

It's a fairly light day in the economic calendar for the dollar, with the only release of note being trade balance figures which are out at 12:30 pm.

After a torrid week last week, the bad news kept rolling in on Monday for the Australian Dollar. It plummeted to fresh six-year lows against its US counterpart as market sentiment was widely hit by Greek voters rejecting the bailout package on offer from her creditors. AUD/USD fell to its lowest level since May 2009, trading around the 0.746 level. Having said this, there was a light at the end of the tunnel as data out from Australia showed that job advertisements surprising rose last month, gaining 1.3%.

Looking forward to today, we have already seen the release of the Reserve Bank of Australia (RBA) cash rate decision, which came out in line with expectations voting for no change, keeping the rate at 2%. At the last meeting it was also decided to leave interest rates unchanged, however, the recent shortfalls in the Australian Dollar’s performance against its peers may lead to a more heated discussion this time around, so analysts will review the accompanying statement with great care.

Across the other exotic currencies, the only other release of note will be the trade balance figures from Canada later on this afternoon.