Analysis / Daily / Finance / forex

Attention Now Turns to Greece

One Pound
The pound rallied against the dollar and the euro on Friday after Prime Minister David Cameron’s Conservative Party won a surprise majority in British elections, easing concerns over the prospects of lengthy coalition negotiations. GBP/USD hit highs of 1.5521, the most since February 26 and ended at 1.5456, up 1.39% for the day. GBP/EUR reached 1.3839 before finishing at 1.3791, a gain of 1.85% for the day. Ahead of the elections, sentiment on sterling had been hit as opinion polls pointing to a hung parliament fuelled concerns over the likelihood of an unstable coalition government. In the week ahead investors will be turning their attention to Monday’s monetary policy announcement by the Bank of England and Wednesday’s U.K. inflation report.

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The euro slipped against the dollar as nerves took hold before key talks between Greece and euro zone finance ministers. The euro fell 0.6 percent to $1.1137, pulling back from a two-month peak of $1.1392 struck Thursday when the outlook for the European economy thawed and euro zone bond yields spiked, grabbing attention away from Greek debt saga. The rise in euro zone yields petered out late last week, taking some support away from the common currency. Greek-related headlines have begun filtering out over the weekend, and the debt negotiations will be one of this week’s currency themes. Today’s Eurogroup meeting and its impact on the euro will certainly be in focus. The Eurogroup of euro zone finance ministers has ruled out clinching a deal to unlock aid for Greece at Monday’s meeting, although Athens remains hopeful that the meeting will note progress in talks with lenders. Greece risks defaulting on its debt if it does not receive fresh funding.

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Theemained broadly supported against a basket of other major currencies on Friday, after data showed that the U.S. economy created slightly less jobs than expected last month, while unemployment declined in line with market expectations. The Department of Labour said that the U.S. economy added 223,000 jobs last month, below expectations for an increase of 224,000. The number of jobs added in March was revised to 85,000 from a previously estimated 126,000. The report also showed that the U.S. unemployment rate ticked down to 5.4% in April from 5.5% the previous month, in line with expectations. The U.S dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.20% to 94.92. In the week ahead investors will be turning their attention to U.S. data on retail sales and consumer sentiment for.

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