Good morning and welcome to today\u2019s foreign exchange market commentary on Thursday, the 16th of February.<\/p>\n
The drama over Greece\u2019s latest round of rescue package continues. And this time the EU wants to ensure that Athens doesn\u2019t renege on its austerity commitments after elections are held in April. Latest rumours suggest European Finance Ministers may withhold all or part of the bailout money while avoiding a bailout. What this means is that the \u20ac130 billion bailout money may be delayed though a small portion may be released to ensure the country meets its repayment obligations of \u20ac14.5 billion falling due on March 20. This resulted in angry reactions from Athens with Greek Finance Minister Evangelos Venizelos taking an indirect dig at Germany saying \u201cthere are some playing with fire, domestically and abroad.\u201d<\/p>\n
The situation deteriorated further as ratings agency Moody\u2019s said it was reviewing some 114 European banks and financial institutions, including nine of the biggest UK banks. The overall GDP growth prospect of the eurozone remains weak with Q4 GDP contracting by 0.3 percent, driven downward largely by the Netherlands and Italy. The latest contraction comes for the first time since Q2, 2009 and unless banks start lending to businesses and households to increase consumption, the downward spiral will only continue. No amount of LTRO will help. Incidentally the Greek economy contracted by seven percent in 2011, further government spending cut certainly doesn\u2019t augur well for the country in 2012.<\/p>\n
Back home, the Bank of England\u2019s Quarterly Inflation Report came in as expected. It said due to the ongoing EU uncertainties, the annual GDP growth will be \u2018zigzag\u2019 around zero percent. The inflation outlook however, remained high, forcing some analysts to revise their quantitative easing forecasts for the year.<\/p>\n
CURRENCY RATES OVERVIEW<\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.2040
\nGBP\/US$<\/strong> \u2013 1.5688
\nGBP\/CHF<\/strong> \u2013 1.4538
\nGBP\/CAN$<\/strong> – 1.5712
\nGBP\/AUS$<\/strong> \u2013 1.4678
\nGBP\/ZAR<\/strong> \u2013 12.2076
\nGBP\/JPY<\/strong> \u2013\u00a0123.259
\nGBP\/HKD<\/strong> \u2013\u00a012.1646
\nGBP\/NZD<\/strong> \u2013 1.8945
\nGBP\/SEK<\/strong> \u2013\u00a0 10.5664<\/p>\n