Good morning and welcome to today\u2019s foreign exchange market commentary on Tuesday, the 7th of August.<\/p>\n
Resolving Europe\u2019s distributional disputes<\/em><\/p>\n Even though German Chancellor Angela Merkel\u2019s ruling coalition signals they won\u2019t block a possible ECB intervention to bring down yields of peripheral bonds, the Bundesbank seems undecided. The political flare up between Italy and Germany over widening borrowing-cost spreads has its roots in distributional disputes which invariably transforms into \u2018us versus them\u2019, thus complicating the overall situation. If every policy dispute turns into a zero-sum game where one party essentially end up on the losing side, progress and trust becomes the first casualty.<\/p>\n We have seen this example in the US as the country inches forward towards the so-called \u2018fiscal cliff\u2019 while the Democrats and the Republicans lock horns over tax and budgetary issues. But nowhere it exemplified more than in Europe since the region plunged into crisis three years ago. The lines have already been drawn; the first group argues that the individual failings of the members have imposed enormous costs on neighbours while the second highlights the broad policymaking deficiencies and the measures to correct them. While the north believes the south is robbing them of their savings, the south is getting angry over the emergence of \u2018creditocracy\u2019 in Europe, a term used by the mild-mannered Italian Prime Minister Mario Monti to point out those who pretend to be donors in Europe. Monti rightly pointed out that contrary to popular perception, Italy still contributes to fight the crisis and hence still a creditor.<\/p>\n The solution to these distributional disputes need not overlook the ground realities since successful societies don\u2019t stop differing over taxation, regulation and redistribution. But they should not consume entire debates, essentially turning the entire affair in a zero-sum game.<\/p>\n CURRENCY RATES OVERVIEW<\/strong><\/p>\n GBP\/EURO<\/strong> \u2013\u00a01.2574 EUR: There has been a change of perception over the last couple of days that Germany will not oppose the ECB\u2019s bond buying program, formulated to bring down the spread between the core and peripheral borrowing rates. Sentiments were further bolstered after US President Barack Obama reportedly called Spanish Prime Minister Mariano Rajoy, offering his support to Rajoy to get the Spanish economy back on track. The single-currency has strengthened against the greenback in the past 24 hours, gaining further traction after ECB Governing Council member Ardo Hansson said bonds purchase by the region\u2019s bailout funds will substantial and sustainable, but will be subject to strict conditions. In the absence of tier-1 economic data today, the euro is expected to move on the ECB\u2019s bond-buying news even though we have the Italian GDP number and German factory order due in the morning. The GBP\/EUR pair opens at 1.2430 this morning.<\/p>\n USD:\u00a0 GBP long traders rushed to book profits in early London trading yesterday, pushing the GBP\/USD pair down to 1.5550. The cable however gained some ground by late afternoon trade to close at 1.5644 after risk sentiments improved over news reports suggesting possible German concessions to ECB\u2019s proposed bond purchase plan. The Pound continued to grind higher after UK retail sales improved mildly, posting a growth of 0.1 percent against an estimated -0.2 percent. Though markets will eye the UK Manufacturing Production reading, it\u2019s unlikely to impact the GBP\/USD pair. The pair opens at 1.5615 this morning.<\/p>\n","protected":false},"excerpt":{"rendered":" Good morning and welcome to today\u2019s foreign exchange market commentary on Tuesday, the 7th of August. Resolving Europe\u2019s distributional disputes Even though German Chancellor Angela Merkel\u2019s ruling coalition signals they won\u2019t block a possible ECB intervention to bring down yields of peripheral bonds, the Bundesbank seems undecided. The political flare up between Italy and Germany over widening borrowing-cost spreads has […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[110],"tags":[],"_links":{"self":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2168"}],"collection":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/comments?post=2168"}],"version-history":[{"count":1,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2168\/revisions"}],"predecessor-version":[{"id":2169,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/posts\/2168\/revisions\/2169"}],"wp:attachment":[{"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/media?parent=2168"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/categories?post=2168"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.mycurrencytransfer.com\/blog\/wp-json\/wp\/v2\/tags?post=2168"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nGBP\/US$<\/strong> \u2013 1.5581
\nGBP\/CHF<\/strong> \u2013 1.5108
\nGBP\/CAN$<\/strong> – 1.5588
\nGBP\/AUS$<\/strong> \u2013 1.4732
\nGBP\/ZAR<\/strong> \u2013 12.7250
\nGBP\/JPY<\/strong> \u2013\u00a0121.92
\nGBP\/HKD<\/strong> \u2013\u00a012.0835
\nGBP\/NZD<\/strong> \u2013 1.9012
\nGBP\/SEK<\/strong> \u2013\u00a0 10.4683<\/p>\n