The pound managed yet another multi-year high against the euro yesterday as a combination of better than expected UK economic data and the fall out from the Greek fiasco pushed GBP/EUR to its highest level since late January 2008. The impressive data from the UK came in the form of lower unemployment, coming in at 5.7% from an unexpected higher figure of 5.8%, higher average earnings coming in at 2.1% from a lower expected figure of 1.7% and all MPC members voting to keep rates on hold. Such rises in cable are being looked at by VFX clients as buying opportunities, as clients are buying on the dips with the expected medium to long term view that the dollar will come back again and look to strengthen throughout the rest of this year.
A rest-bite for the single currency came as news spread that the ECB has approved a request from Greece’s central bank to lend €68.3 billion ($99.4bn) to its country’s banks through an emergency credit facility. The ECB program, known as Emergency Liquidity Assistance, became a lifeline for Greek banks after the ECB’s decision two weeks ago to refuse Greek government bonds as collateral for standard ECB loans. The decision came as Greek officials try to hammer out an agreement with their international creditors over the country’s €240 billion bailout. The Greek government said Wednesday that it will send a formal request for an extension of four to six months to its bailout program, giving the government time to negotiate a new reform and lending program with other European governments.
The dollar was almost flat against sterling , the euro and yen in Asian trade Thursday. The dollar was at ¥118.64, compared with ¥118.63 late Wednesday in New York. Among the currencies trading pairs, the euro was at $1.1417 from $1.1397, the yen at ¥135.46 from ¥135.22 and sterling at $1.5460 from $1.5440.