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Posted March 18th, 2013 by Charles Purdy

Cyprus shockwaves undermine the Eurozone | Smart Daily Currency Note

GBP/EUR – 1.1658

Sterling performed relatively well on Friday following comments from the Governor of the Bank of England who said that the central bank is not actively trying to devalue sterling, furthermore stating that he does not think that it will drop much further. It is an extremely important week for sterling with two hugely influential releases in the form of the Chancellors budget and the minutes from the latest Bank of England Monetary Policy Committee (MPC) meeting. The market will look to the meeting minutes to see if any more of the MPC members voted in favour of increasing the current levels of quantitative easing, whilst traders will pay particularly close attention to the Chancellors budget. We also have key inflation data, retail sales figures and statistics showing the change in the number of people claiming unemployment related benefits. With so much happening in the UK this week, there is a high probability of increased volatility and the potential for dramatic downside movements should we see a raft of negativity. Call in now to speak to your trader and to see what you can do to protect yourself from adverse market movement.

The euro has been sold off heavily over the weekend, dropping against all of it major trading partners following the news that the EU and IMF have imposed a one-off levy on all bank customers in Cyprus in the region of 6.75-10% in return for the 10 billion euro bailout. This has caused widespread panic and send shockwaves through the markets, but, the decision to impose the levy still needs to be passed by the Cypriot parliament today – and the markets are nervous that parliament may instead vote to leave the Eurozone. This week’s performance also depends very much on various data released from Germany including the results of the monthly economic sentiment survey and German manufacturing data. We also have services and manufacturing Purchasing Managers’ Index (PMI) data released across Europe which will give further indication of how fragile the regions economy is. Call in now for up to date rates and information.

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