Good morning and welcome to today’s foreign exchange market commentary on Tuesday day the 31st of January.
The EU at long last had something to cheer about yesterday as the greater fiscal union proposed by Germany was formally accepted by member nations except the UK and the Czech Republic. The treaty mandates budget deficits at a small percentage of GDP and advocates stricter budget discipline. Welcoming the development, ECB President Mario Draghi said this is the first step that will strengthen investor confidence in the EU area.
The Greece PSI negotiation however, continues to linger on and a resolution seems elusive. There’s no deadline set and a Greek default will certainly ensure a silent exit forAthensfrom theUnion.
CURRENCY RATES OVERVIEW
GBP/EURO – 1.1944
GBP/US$ – 1.5735
GBP/CHF – 1.4397
GBP/CAN$ – 1.5737
GBP/AUS$ – 1.4797
GBP/ZAR – 12.309
GBP/JPY – 120.04
GBP/HKD – 12.2036
GBP/NZD – 1.9122
GBP/SEK – 10.6011
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EURO: The lack of a debt swap deal onGreececontinues to weigh down the single currency. The market was cautiously optimistic yesterday after 25 of the 27 members signed for a greater fiscal compact. The GBP/EUR pair remained a little choppy over the past 24 hours and opens at 1.1941 this morning.
USD: Cable weakened yesterday over theGreecedebt deadlock and hit a session low of 1.5660. Income and spending data from theUSshowed consumers are saving more and spending less. However, this had little effect on the GBP/USD pair and the cabled pushed higher after news of greater consumer confidence in theUKfor the month of January came in. The greenback remains bearish this morning and opens at 1.5760.
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Have a great weekend!