Good morning and welcome to today\u2019s foreign exchange market commentary on Monday the 23th of January.<\/p>\n
The deadlock over Greek debt negotiation continues. The market had expected a breakthrough on Friday, but had to contend with no result. It is looking increasingly unlikely that a deal will be reached today \u2013 a deadline set by Greek Finance Minister Venizelos. The Greeks have proposed a whopping 70 pc haircut on the country\u2019s debt, which if accepted will bring down the country\u2019s debt to GDP ratio to 120 pc from the current 180 pc and facilitate the next round of bailout money.\u00a0 If rejected, a vey disorderly Greek default and subsequent chaos awaits the global markets in March. Of course the market will react to the news much early, probably today or by tomorrow.<\/p>\n
The sudden weakness of the single currency in the past 24 hours vis-\u00e0-vis the Sterling, can probably traced back due to this uncertainty.<\/p>\n
EU officials expect, quite correctly, that Chancellor Merkel will agree to a bigger safety net in March once two key treaties \u2013 one on budget discipline to reign in profligate states, and the other on the operating rules of the permanent rescue fund, are signed. The fact remains that Ms Merkel has more confidence in Monti\u2019s Italy than Greece, though she has not publicly acknowledged so. Italian\u2019s complaining about rising taxes and spending cuts by the government should take heart that sovereign borrowing costs have gone down despite S&P downgrading the country by two notches recently.<\/p>\n
\u00a0CURRENCY RATES OVERVIEW\u00a0<\/strong><\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.2025
\nGBP\/US$<\/strong> \u2013 1.5553
\nGBP\/CAN$<\/strong> – 1.5737
\nGBP\/AUS$<\/strong> \u2013 1.4804
\nGBP\/ZAR<\/strong> \u2013 12.36
\nGBP\/JPY<\/strong> \u2013\u00a0119.85
\nGBP\/NZD<\/strong> \u2013 1.9225<\/p>\n