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Posted March 20th, 2013 by Charles Purdy

Cyprus, UK budget – a busy day for news | Smart Daily Currency Note

GBP/EUR – 1.1695

Sterling had a positive day yesterday, in particular against the euro– reaching 1.1750 before retracing as investors are treating sterling as a relative safe haven due to the uncertainty surrounding the events taking place in Cyprus. The inflation data released yesterday will disappoint consumers, showing a small increase to 2.8%, squeezing the general public’s pockets ever more.  Wednesday will be an extremely busy day for the UK, with several key releases creating the potential for a great deal of market volatility. The Bank of England’s Monetary Policy Committee minutes released this morning will reveal the outcome of votes from the March meeting. Markets expect an unchanged outcome with 3 members voting for more quantitative easing – should this number increase to 4, you can expect sterling to suffer. We will also have the annual budget from the Chancellor  which will be watched closely for any reforms that could boost growth in the UK – however no major change is expected, remaining broadly unchanged relative to the December Statement.  Today we will also see a raft of labour related data released, with the overall  unemployment rate predicted to remain unchanged at 7.8%, whilst another drop in the number of people claiming unemployment related benefits is expected. Call in now for the latest update.

Contagion is the word on trader’s lips this week, as the chaos in Cyprus threatens the stability of the euro. Rumours were abounding over the resignation of the Finance Minister, highlighting the uncertainty surrounding affairs in the region. The debate ahead of the crucial vote on the IMF bailout began last night with many, including the Minister for Defence, expecting the motion to fail. Yesterday evening we saw this expectation come to pass and parliament  rejected the bank levy bill. The rejection of the bailout – some say – amounts to a vote to leave the Eurozone, so the consequences could be dramatic but the market reaction has been muted. While the flexibility shown in regards to the Greek bailout would lead you to believe that Europe would give them a second chance, on-going uncertainty does not bode well for the 17 nation currency either way. After dropping to levels not seen since November yesterday against the US dollar we wait to see how low can the euro go. Get in touch with your trader to find out.

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