EURGBP Analysis: Support at 0.7072/0.7050, resistance at 0.7140/0.7168

With Greece voting with a resounding “No” to the demands of the creditors, the ball has been smashed straight back to the court of the EU, ECB and IMF. A meeting is now due for Tuesday to discuss how to move the situation forward. Greece does not accept the harsh austerity being thrust upon it and now the decision must be whether to restructure the debt profile, or whether the ECB is told to not increase the liquidity to the banks which would be akin to ushering Greece towards the exit door of the Eurozone. Greek finance minister Yanis Varoufakis has resigned, which could help to smooth the road to a deal, but from a Greek perspective, Tsipras has given the creditors a massive decision to make. Will the ECB really do whatever it takes to save the euro? Is the euro a one way train or is it a revolving door currency? We are now likely to find out now sooner rather than later.
In the meantime, volatility on financial markets will be elevated. The immediate reaction on currency markets was to sell risk and buy safe havens. The euro (obviously) came under immediate selling pressure, as did the Aussie. However, there has been a jump back after the initial reaction, suggesting perhaps that the forex markets are reasonable stable moving into the European session. Equity markets have come under the biggest pressure, with Asian markets generally around 1% to 2% lower (Japanese Nikkei 225 was off 2.1%), whilst the European markets have also started under significant pressure. Be mindful of the reaction though from last Monday where markets rebounded sharply through the day amidst high volatility. Interestingly, the initial safe haven buying pressure on gold has dissipated though the Asian session and is now trading around flat on the day.
Traders will clearly be focusing on reaction surrounding Greece today, but with the US on public holiday on Friday they still have to announce the ISM Non-Manufacturing PMI at 1500BST today. An improvement to 56.2 is expected (up from 55.7 last month).