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A landmark week for GBP/EUR as the highest level since the credit crisis began is breached

£/€
Range of the week: 1.2376 – 1.2442
Variance of the week on £10k=€ 66

Key Focus for the Euro this week has clearly been the elections in France, Greece and Italy.

France: Francois Hollande becomes the first French socialist President in 17 years, His victory was in part due to his hostility towards the focus of austerity by his predecessor, and by association the German Chancellor Angela Merkel.

Greece: The situation in Greece is complex, however in Sundays elections, votes drained away from the larger parties towards smaller parties on both the left and right, essentially a coalition must now be formed, but the party with the best chance of forming one has called to be joined by parties rejecting austerity.

Italy: Centre-left and protest parties have made gains in Italy's local elections, amid discontent with the government's austerity drive. The centre-right People of Freedom (PDL) party of former Prime Minister Silvio Berlusconi did particularly badly.

So why the negative impact on the Euro?

All of the above results cast serious doubt over the durability of the respective countries austerity plans, with new leaders potentially ignoring previously agreed cuts and spending again like before. What if Portugal, Spain etc see this happening and feel they can do the same? The facts are in all of these countries cuts are simply a necessity, but it is unclear how these cuts will now be made, the markets naturally hate uncertainty and as a result we have seen GBP/EUR hit a 3 ½ year high.

The focus for the pair has clearly been on Europe, with nothing of any significance out of the UK this week.


£/$
Range of the week: 1.6124 – 1.6199
Variance of the week on £10k=$:75

A very tight range for cable this week, reflecting the limited data from each side of the pond.


£/AUS
Range of the week: 1.5838 – 1.6048
Variance of the week on £10k=AUS 210

Not much in the way of significant data this week, however the fall out continues after the recent surprise cut in the Australian base rate, with 1.60 being breached for the first time since November.


£/NZD
Range of the week: 2.0285 – 2.0570
Variance of the week: on £10k=NZD 285

Although the Kiwi base rate was last cut in March, the Aussie and New Zealand economies are closely linked, therefore the associated fallout from the Aussie cut has seen GBP/NZD at its best level since December.


£/ZAR
Range of the week: 12.604 – 12.826
Variance of the week: on £10k=ZAR 2220

No significant data


£/CAD
Range of the week: 1.6051 – 1.6177
Variance of the week: on £10k=CAD 126

No significant data
 
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