Greek bailout terms reached as UK retail sales surprise to the upside

Tom Tong21/Feb/2012Currency Updates

GBP

Sterling weakened by 0.24% against the dollar by the close of trading last night and lagged against other growth linked currencies after news that gross mortgage lending declined by 14% in January in the UK, although it may rally back later this week as news that the public sector borrowing is set to have decreased, showing the governments balance sheet is improving month by month and signs of recovery in the UK economy.

Retail sales were up 0.9% in January signalling strength for the pound while figures of footfall in shops were down 0.9% outlining the ongoing popularity of internet shopping although it can be mainly due to the snowfall of a few weeks ago so this figure should just be seen as a seasonal change.

HSBC has launched a £4 Billion fund to small and medium business with a turnover of up to £25 million to increase international trading.

EUR

With the second Greece bailout package of €130 billion finally agreed in the early hours of this morning in Brussels, although it doesn’t come as any great surprise to investors as the proposed terms have been heavily discussed in the past, it does create a sense of relief. They have added a number of safety clauses put in place to make sure there is not a repeat of the last bailout attempt.

The single currency traded to a two week high against the Dollar off the back of the news from Brussels.

Oil prices soared to a 9 month high from the news that Iran cut exports to Britain and France over the weekend, the announcement came just days after Iran threatened to cut supplies to some European Union countries in retaliation for sanctions put in place by the EU and United states. Prices are already up by nearly 9% from the start of the year. This ban should not have a great impact on Britian or France as thier imports are minimal from the Persian state, but if the ban were to spread through europe to nations such as Spain, Italy and Greece, it could create even more problems for the struggling nations.

USD

A fairly quiet day yesterday as the US markets were closed due to a national holiday (Presidents day). The usually strong currency softened against most rivals after China cut its reserve requirements for lenders, thus causing an increase in investor appetite for riskier assets, effectively selling their dollars which decreases the value of the currency.

The strongest move from the dollar came against the Japanese Yen trading at a 6 month high after news that Japan had its biggest trade deficit on record.

The news of Oil prices increasing should help strenghten the Dollar in the long term.

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Written by Tom Tong

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