Good morning and welcome to today\u2019s foreign exchange market commentary on Tuesday the 20th of December.<\/p>\n
The single currency suffered a jolt again in the past 24 hours as European leaders failed to reach an agreement over the size of additional loans to IMF. An additional \u20ac200 billion in loans to the IMF was expected, but only \u20ac150 billion materialised after a late afternoon conference call. Sweden, Denmark, Poland and the Czech Republic didn\u2019t participate in the funding and have sent the proposal back to their parliaments for approval. Britain also refused to contribute stating participation from non-EU members is required before it loosens its purse. <\/p>\n
The continuing uncertainty in the EU has triggered the speculation of the euro\u2019s demise in 2012. But looking at Germany\u2019s resolve, it seems unlikely. Chancellor Merkel has given a little up a little more ground at each emergency summit meeting. She allowed the Greek debt haircut, bringing the country back from a sure-default, approved recapitalization of the region\u2019s banks to prevent another Lehman-type scenario, gave the go-ahead for the creation of the permanent bailout fund \u2013 the ESM, and convinced EU members for greater fiscal union. In effect she has ensured that fiscal discipline is enforced and refused to dole out free lunches to erring economies.<\/p>\n
Once the dust settles over unlimited currency printing, don\u2019t be surprised if she actually allows some of it in 2012. And then a larger ESM followed by a green-signal to the ECB to become the lender of the last resort. And perhaps Eurobonds as well. <\/p>\n
GBP\/EURO \u2013 1.1934
\nGBP\/US$ \u2013 1.5552
\nGBP\/CHF \u2013 1.4579
\nGBP\/CAN$ – 1.6119
\nGBP\/AUS$ \u2013 1.5639
\nGBP\/ZAR \u2013 12.9782
\nGBP\/JPY \u2013 121.21
\nGBP\/HKD \u2013 12.0995
\nGBP\/NZD \u2013 2.0468
\nGBP\/SEK \u2013 10.7532<\/p>\n